Managing director -retirement by rotation

Meetings 7189 views 8 replies

Shruti_D

ACS

453 Points Joined May 2011

At the 29^th AGM, the company had approved the re-appointment of Managing Director for a period of five years with effect from 20^th October, 2006. The said term expired on 19^th October, 2011.

At the 33^rd AGM of the company, the shareholders approved his re-appointment for another term of five years with effect from 20^th October, 2011.

Now, this will be 34^th AGM of the company in 2012. While calculating the number of directors who shall retire by rotation, whether MDs re-appointment date forms part of "last date of appointment" ??? i.e. last dt of apptmt wld be 2011 and not his last date of retirement by rotation, ryt.

Secondly, if after such calculation, it is concluded that his term is the longest in the office, then whether the company shld consider him as director retiring by rotation to be re-appointed?

Note:

Company is public listed entity and its articles do not contain anything specific in this matter.

As per Companies Act, there’s no specific provision which states that MD cannot retire by rotation.

Last yr AGM 2011, his reapptmt, this yr AGM 2012 his retirement by rotation, does this happen practically?

Replies (8)

Shridhi Jain

Company Secretary

1678 Points Joined July 2009

MD /WTD are the directors in wholetime employment of the company and hence they are not liable to retire by rotation. 'Longest term in office' is in the case of directors liable to retire by rotation (i.e 2/3 of the total strength of the directors) and obivously you will not count MD/WTD in liable to retire by rotation as they will form the remaining 1/3 strength of directors.

RAMESH CHANDRA SHARMA

munka istentisztelet

899 Points Joined April 2011

Originally posted by : Shridhi Jain
	MD /WTD are the directors in wholetime employment of the company and hence they are not liable to retire by rotation. 'Longest term in office' is in the case of directors liable to retire by rotation (i.e 2/3 of the total strength of the directors) and obivously you will not count MD/WTD in liable to retire by rotation as they will form the remaining 1/3 strength of directors.

u certainly be right but can u please specify the appropriate section in respect to the matter.......

Shruti_D

ACS

453 Points Joined May 2011

Ok. thanks for the clarification.

1/3rd of dirs retire by rotation and for the purpose of determining which dirs retire by rotation, whole time dirs as well as such dirs who retired by rotation in last AGM shall be excluded right.

for eg: Co. has 6 dirs, so 2 shall retire by rotation. out of them 1 MD and 2 dirs who retired in last AGM wld nt b considered, ryt. so no. of dirs to be considered for rotation= 3 dirs.

For those 3 dirs, their 'last dt of apptmt' would be when the AGM in which their rotation & reapptmt happened , ryt.....

and longest would be 2012 minus that dt Year of apptmt ryt.

Can u confirm my calulations.

Shridhi Jain

Company Secretary

1678 Points Joined July 2009

For eg.

Total directors = 6

Directors liable to retire by rotation = 2/3 of 6 = 4

Director actually must retire by rotation = 1/3 of 4 = 1.33 (rounded off to 2) = 2

So out of 6, 4 directors are liable to retire by rotation and remaing 2 directors can b MD/WTD of the company

For this you can refer sec. 256.

Dear Ramesh, you can refer sec. 268. This section can provide you some clarity and I hv read somewhere that it is clearly mentioned, may be in Ramaiya. I will check and let you knw, exactly whr is it mentioned.

Shruti_D

ACS

453 Points Joined May 2011

OK.

Got it now.

Bt wat abt the date of last apptmt? How to calculate 'longest in office since their last appointment' ?

Shridhi Jain

Company Secretary

1678 Points Joined July 2009

Last date of appointment is the date of appointment after retirement.

Shruti_D

ACS

453 Points Joined May 2011

Ok. So, if the director retired by rotation in 2009, then the for this years AGM his no of years wld be 2012- 2009 .i.e 3

Simulataneously these years are to be compared, so as to know, longest in office ryt.

Anurag Nagar

Practicing Company Secretary

26 Points Joined February 2011

There is no law which says that MD/ WTD cannot be counted u/s 255 for directors liable for rotation.

Thats why It is desirable to have a provision in the article to exclude MD/WTD from the rule of retirement of director by rotation and provide that a person shall not be liable to retirement by rotation so long as he continues to hold office of MD.

In case the MD/WTD is liable to retirement as director by rotation but he is appointed as MD for a fixed term say five years, and at annual general meeting he retires by rotation but he is appointed at the same meeting, it is necessary to include a phrase in the article or in the initial resolution meant to appoint the person as a managing director or whole time director on the following lines:

A managing director or a whole time director who is re-appointed as a director immediately on retirement by rotation shall continue to hold his office of managing director or whole time director and such re-appointment as director shall not be deemed to constitute break in his appointment as managing director or whole time director

In this case managing director office does not suffer any break if he retires by rotation under section 255 and is re-elected as a director in the same meeting. Hence, in such case the approval of government would not be necessary where the term of appointment of managing director has already been approved by government for that period