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Section -152 (6) retiring by rotation

Desai (CS) (329 Points)

09 July 2014

Hello,

Please suggest the correct method/ calculation of director retiring by rotation.

FOR ID -section 149 clearly mention that Independent director shall not retire by rotation so for determing 2/3 to include such director or not .

pls suggest wbt MD./ED clarification.

regds

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8 Replies

SANTOSH SHAH (Company Secretary) (754 Points)
Replied 09 July 2014

In my view, ID should be excluded ( Ref. Section 149 (13) ) and remaining Directors to be taken into count for calculating 2/3rd of Total Number of Directors whose period of office is liable to retire by rotation unless Articles provide all directors to retire by rotation.

Of the 2/3rd, 1/3rd of Directors shall retire by rotation.

MD & WTD to be excluded in my view for calculation but ED to be taken into count.

Other members views solicited.

regards

Santosh Shah

Originally posted by : Desai
	Hello, Please suggest the correct method/ calculation of director retiring by rotation. FOR ID -section 149 clearly mention that Independent director shall not retire by rotation so for determing 2/3 to include such director or not . pls suggest wbt MD./ED clarification. regds

Vandana J Doshi (Practising Company Secretary) (12562 Points)
Replied 10 July 2014

Hi as per the new Act, IDs are specifically excluded from liable to retire by rotation....As for the MDs/WTDs the act does not specify anything.....earlier they were excluded from the same.... However, keeping in view the new requirements, the co has 2 options....either include MDs and WTDs in the scope of retire by rotation or appoint such number of directors to fulfill the requirements of the Act.

SANTOSH SHAH (Company Secretary) (754 Points)
Replied 10 July 2014

Hi Vandana

In my view, MD / WTD shall not be liable to retire by rotation because when they get appointed

they shall be through agreement for a fixed period for a term not exceeding 5 years.

WTD is Director on wholetime basis for the company.

Hence their posts shall not be subject to retirement by rotation.

Other members views solicited.

regards

Santosh Shah

Originally posted by : Vandana J Doshi
	Hi as per the new Act, IDs are specifically excluded from liable to retire by rotation....As for the MDs/WTDs the act does not specify anything.....earlier they were excluded from the same.... However, keeping in view the new requirements, the co has 2 options....either include MDs and WTDs in the scope of retire by rotation or appoint such number of directors to fulfill the requirements of the Act.

Desai (CS) (329 Points)
Replied 10 July 2014

Hello,

That means if co has 8 directors -one is M.D., Three is ID-

Then the calculation will be -

Option -A

1) Total -8 Directors -2/3 will be 5.33 say 5 Directors and out of 5-1/3 is 1.66 so total 2 directors will be retire by rotation and should not be MD/WD/ID.

Option B

1) Out of Total 8 Directors- to take only 4 directors (to exclude-1 MD and 3 ID)so 2/3 of 4 is 2.66 say 3 director and 1/3 of 3 is 1 director . so total 1 director will retire by rotation and it willnot be MD/WD/ID

Please suggest wch option is correct and also suggest when the director is not MD/WD/ID but part of the promoter group -can he be retire ?

SANTOSH SHAH (Company Secretary) (754 Points)
Replied 10 July 2014

Option B is correct in my view.

regards

Santosh Shah

Originally posted by : Desai
	Hello, That means if co has 8 directors -one is M.D., Three is ID- Then the calculation will be - Option -A 1) Total -8 Directors -2/3 will be 5.33 say 5 Directors and out of 5-1/3 is 1.66 so total 2 directors will be retire by rotation and should not be MD/WD/ID. Option B 1) Out of Total 8 Directors- to take only 4 directors (to exclude-1 MD and 3 ID)so 2/3 of 4 is 2.66 say 3 director and 1/3 of 3 is 1 director . so total 1 director will retire by rotation and it willnot be MD/WD/ID Please suggest wch option is correct and also suggest when the director is not MD/WD/ID but part of the promoter group -can he be retire ?

Vandana J Doshi (Practising Company Secretary) (12562 Points)
Replied 11 July 2014

Hi Desai ji....option B is correct......

Vandana J Doshi (Practising Company Secretary) (12562 Points)
Replied 11 July 2014

Santosh ji.....no where in the act it is written that MD/WTD cannot retire by rotation.....it is an interpretation used in general practice.....keeping in the mind the same, if their are sufficient number of directors as given in the example above, MDs/WTDs can be excluded......

SANTOSH SHAH (Company Secretary) (754 Points)
Replied 11 July 2014

Dear Vandana

I agree with you that it is not specifically written in the act where MD/WTD cannot retire by rotation.

However the point which i would like to bring to notice is that, if a MD who is appointed by agreement say for a fixed term for 5 years, and where his office is fixed for such term with the company in carrying out his duties, does it make any meaning of such office of MD liable to retire by rotation?.

Hence in this aspect, I said the office of MD shall not be taken into count when Directors Retire by rotation.

If Any Different views from Members / Experts on this solicited.

regards

Santosh Shah

Originally posted by : Vandana J Doshi
	Santosh ji.....no where in the act it is written that MD/WTD cannot retire by rotation.....it is an interpretation used in general practice.....keeping in the mind the same, if their are sufficient number of directors as given in the example above, MDs/WTDs can be excluded......