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poonam verma (Company Secretary)     07 April 2011

Rotational directors

Dear Friends,

I have  4 directors in my unlisted public company. Out of 4 directors 1 is MD and 1 is the WTD. according to my articles MD and WTD are the non-rotational directors. Then how can i comply with the provisions of section 255. What will be the number of rotational directors in my company. Do i need to appoint more directors for compliance of provisions of section 255 & 256 of companies act and what is penalty for non-compliance.

Kindly advice.

Thanks in advance

CS Poonam



 17 Replies

Shridhi Jain

Shridhi Jain (Company Secretary)     07 April 2011

I think, you need to show the retirement of one director (who is not MD and WTD).

One third of the total number of directors are liable to retire by rotation.

In your case, one third of four will be ONE.

So u need to show the retirement of One director only.

Expert views needed.

Parashar

Parashar (Company Secretary 2004)     07 April 2011

Shridhi is correct.

Abhinash Pansari

Abhinash Pansari (CA final Article)     07 April 2011

In my opinion 1 director should be retired because as per CA 1/3rd of the toatal must be retired unless contrary provided in AOA. Here 2 x 1/3 = .66 i.e 1 director. 

Hence you are not bound to appoint more director.

Again, Dont bother for penalty as you are as per law

Syam kamal

Syam kamal (Company Secretary)     07 April 2011

Dear Poonam

 

The composition of Board in not in accordance with Section 255 of the Companies Act, 1956 which requires at least two-third should be directors liable to retire by rotation. So in your case at least three rotational directors should be there instead of present two. As you rightly pointed out in your question you have to induct one more rotational director and two directors (1/3rd of 5) shall retire each year thereafter.

 

Section 255 doesn’t says anything about penalty for non compliance. Hence penalty provided under Section 629A is applicable

1 Like
poonam verma

poonam verma (Company Secretary)     07 April 2011

 

Originally posted by : Syam kamal

Dear Poonam

 

The composition of Board in not in accordance with Section 255 of the Companies Act, 1956 which requires at least two-third should be directors liable to retire by rotation. So in your case at least three rotational directors should be there instead of present two. As you rightly pointed out in your question you have to induct one more rotational director and two directors (1/3rd of 5) shall retire each year thereafter.

 

Section 255 doesn’t says anything about penalty for non compliance. Hence penalty provided under Section 629A is applicable

 thank u all. i think i need to induct one more director and keep 3 rotational directors and 2 MD/WTD. but then 2/3 of 5= 3 will be rotational and at each agm 1/3 of 3 i.e. 1 will retire. but then how can we say that by having only 3 directors in a public ltd. comany we can run it, if we are not able to comply with other provisions of company law by having minimum no. of directors in the board

Syam kamal

Syam kamal (Company Secretary)     07 April 2011

"But then how can we say that by having only 3 directors in a public ltd. comany we can run it, if we are not able to comply with other provisions of company law by having minimum no. of directors in the board" Not clear..... ???

CS Ankur Srivastava

CS Ankur Srivastava (Company Secretary & Compliance Officer)     07 April 2011

Originally posted by : Syam kamal

Dear Poonam

 

The composition of Board in not in accordance with Section 255 of the Companies Act, 1956 which requires at least two-third should be directors liable to retire by rotation. So in your case at least three rotational directors should be there instead of present two. As you rightly pointed out in your question you have to induct one more rotational director and two directors (1/3rd of 5) shall retire each year thereafter.

 

Section 255 doesn’t says anything about penalty for non compliance. Hence penalty provided under Section 629A is applicable

 

I am completely agree with teh view of Mr. Shyam Kamal, Section 255 required that the Company must have atleast 2/3 Rotational Director.

 

The company has to induct 1 or more director to comply with sectino 255.

CS Abhishek Pathak

CS Abhishek Pathak (PCS)     07 April 2011

I also agree with  Mr. Syam kamal. Requirements of sec- 255 and sec-256 will be full filled only by having 1 more director.  

1 Like
Santhosh Poojary

Santhosh Poojary (SIEMPRE AHÍ PARA TI)     07 April 2011

Originally posted by : Shridhi Jain

I think, you need to show the retirement of one director (who is not MD and WTD).

One third of the total number of directors are liable to retire by rotation.

In your case, one third of four will be ONE.

So u need to show the retirement of One director only.

Expert views needed.
CA Sandeep Kumar

CA Sandeep Kumar (Audit Assistant)     08 April 2011

Originally posted by : CS Ankur Srivastava




Originally posted by : Syam kamal






Dear Poonam

 

The composition of Board in not in accordance with Section 255 of the Companies Act, 1956 which requires at least two-third should be directors liable to retire by rotation. So in your case at least three rotational directors should be there instead of present two. As you rightly pointed out in your question you have to induct one more rotational director and two directors (1/3rd of 5) shall retire each year thereafter.

 

Section 255 doesn’t says anything about penalty for non compliance. Hence penalty provided under Section 629A is applicable






 

I am completely agree with teh view of Mr. Shyam Kamal, Section 255 required that the Company must have atleast 2/3 Rotational Director.

 

The company has to induct 1 or more director to comply with sectino 255.

Sudhir Garg

Sudhir Garg (Service)     08 April 2011

Agree with Shyam Kamal.

Naresh Kumar

Naresh Kumar (student)     08 April 2011

Dear Poonam,

Section 255 says that not at least 2/3 of the board of directors shall be liable to retire by rotation. it means not more than 1/3 of the board of directors shall  not  be non rotational. you have to do one thing either make the WTD to retire by rotation or appoint one additional director.

requesting other expert to correct me if i m wrong, 

Syam kamal

Syam kamal (Company Secretary)     08 April 2011

 

Originally posted by : Naresh Kumar

Dear Poonam,

Section 255 says that not at least 2/3 of the board of directors shall be liable to retire by rotation. it means not more than 1/3 of the board of directors shall  not  be non rotational. you have to do one thing either make the WTD to retire by rotation or appoint one additional director.

requesting other expert to correct me if i m wrong, 

Dear Naresh

Can u specify the difference between two

Secondly what if the WTD refuses to retire by rotation because the articles provides him the privilege not to retire by rotation.

Naresh Kumar

Naresh Kumar (student)     08 April 2011

Dear sir, 

i mean to say not more than 1/3 of the board of director shall be non rotational.

 

please tell me how can v make him liable to retire by rotation. By alter the AOA?


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