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Query related to director

CA. Karan Karnani (CA, CS, MCOM, BBA) (110 Points)

14 August 2013  
Case -
A company having at present 6 directors 
1- appointed at the time of incorporation and not liable to retire by rotation. (MD) - A 
1- appointed at the time of incorporation and liable to retire by rotation - B 
3- C,D,E - appointed in october, 2012. And all liable to retire by rotation 
1- F- appointed in feb 2013. And liable to retire by rotation 
In this AGM, appointment of C,D,E and F needs to be regularised. As per section 260.
Also 2 out of 5 directors need to be retire by rotation as per section 255 
if i propose, B and C to retire.
Now my question is that is it correct that C who is to be regularised in the upcoming AGM, is also retiring by rotation at the same time. Can this be done simultaneously .? 
If no is it correct if i propose only B to retire by rotation .?
Note :- C,D,E,F. All are appointed as additional directors
Please help me out with proper explanation

 


 9 Replies

Ayyswariya RG (Knowledge Seeker) (3706 Points)
Replied 14 August 2013

As per Section 255, 2/3rd of the total number of directors of a public company shall be liable to retire by rotation.

Thus, in your case, out of total 6 directors atleast 4 directors should retire by rotation. Hence, this section is being complied with as there are 5 rotational directors.

Secondly, As per section 256, 1/3rd of the rotational directors determined under section 255 shall retire by rotation. The directors to retire by rotation at every AGM shall be those who have been longest in office since their appointment. If 2 or more persons became directors on the same day, then subject to any agreement among themselves, the retiring director shall be otherwise determined by lot.

In your case, out of the 5 rotational directors, 1/3rd of it shall retire by rotation ie 1.67 rounded to 2. 
Thus, the 2 directors need to be determined either by person holding longest in office or by lot.

 

CA. Karan Karnani (CA, CS, MCOM, BBA) (110 Points)
Replied 15 August 2013

but my question is that do additional directors have also to retire by rotation .?

Ayyswariya RG (Knowledge Seeker) (3706 Points)
Replied 15 August 2013

Where all or max no of directors are additional directors, regularization of directors need to be done before the AGM and at AGM, Sec 256 need to be applied for determining the person to retire on rotation as explained above.

1 Like

CA. Karan Karnani (CA, CS, MCOM, BBA) (110 Points)
Replied 15 August 2013

Thankyou....

 

I just made this conclusion some minutes ago... And you confirmed it....

Ayyswariya RG (Knowledge Seeker) (3706 Points)
Replied 15 August 2013

Welcome. Thanks.

CA. Karan Karnani (CA, CS, MCOM, BBA) (110 Points)
Replied 16 August 2013

Hello R.G.

One more question in this case

Do we need to call EGM to regularise the appointment of C.

Ayyswariya RG (Knowledge Seeker) (3706 Points)
Replied 18 August 2013

Hi,
Just now saw your question.

Regularization of additional directors need to be done only at AGM as per section 260.

Reason behind is that, as per words of Section 260, The additional director is appointed between 2 AGM's. The period/term of the additional director is upto the next AGM ; thus making it clearly evident that additional directors need to be regularized only at AGM.

 

CA. Karan Karnani (CA, CS, MCOM, BBA) (110 Points)
Replied 18 August 2013

Hello

 

Saw your reply. Then i will manage both retirement and regularization as you mentioned earlier that they cant happen at same time. It means there is going to be default for sure.

Ayyswariya RG (Knowledge Seeker) (3706 Points)
Replied 19 August 2013

Hi,

If the scenario which you mentioned is the case where regularization of additional directors and also retiring of rotational director is to be managed in the same time frame, then there would be a clash.
Thus, as i mentioned above, the regularization should happen before AGM & at AGM retiring of the rotational director is to be determined.

Note: At special cases where there would be a clash for regularization and retirement, it is advised to conduct the regularization at EGM as a good corporate practise (eventhough sec 260 says about conducting at an AGM)


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