Regarding appointment of additional director

Hi Aditi,

On a plain reading of Section 161(1) my practical view is that office of additional director automatically stands vacated after the date of AGM if his/her appointment is not ratified by the members. If the AGM is not held his position will be vacated after the date on which AGM should have been held. This means he is removed in pursuance of provisions of this Act.

Now, As per Section 167(2) If a person, functions as a director even when he knows that the office of director held by him has become vacant on account of any of the disqualifications specified in subsection(1), he shall be punishable with imprisonment for a term which may extend to one year or with fine which shall not be less than one lakh rupees but which may extend to five
lakh rupees, or with both.

Therfore, we can conclude that additional director will be liable for all the acts done by him after his postion is vacated.

Learned Members Views are appreciated on this topic.

Regards,

Arjun Rajagopal
 

But the penalty specified in section 167 is for disqualification only and except Sec 161 nothing is mentioned about additional director.

Originally posted by : Aditi Bhola
	But the penalty specified in section 167 is for disqualification only and except Sec 161 nothing is mentioned about additional director.

If the additional director appointment is not ratified by the members. Any office held by him is from the next day onwards is itself a disqualfication. Isn't it? 

Please go through Section 167(2) and have your thoughts.

a) Additional director will cease to be a director from the conclusion  of the AGM if he is not appointed in the AGM.

b) He will cease to be liable as a director  from that date.

c) His case is not covered under sub-clauses (a) to (h) u/s 167(1) and hence not liable u/s 167(2).

I agree with Agrawal Sir.

Agarwal Sir,

Thank you for correcting my wrong interpretation. If the additional director  continues in his office even when he knows that his office is vacated. What are the penal consequences on him and on the company? Kindly advise.