Section 255(2)

Q. case 1 Public company has 6 directors in office appointed their first GM. The number of Director liable to retire by rotation u/s 255 comes to 4 (2/3^rd of 6 is 4). Director should retire u/s 256 ==== Nearest to 1/3^rd of rotational directors comes to 1. (1/3^rd of 4 is 1.33 i.e. nearest to 1.33 is 1).

case 2 Pvt. Co. has appointed 4 directors in thier first GM.

Now as per Section 255(2) in the above two cases, 1/3 of remaining directors i.e. 2 directors in case of public co. and directors in generally in case of pvt. co. i.e. 4 directors, shall also be appointed by the company in general meeting.

My question is why we should appoint/reappoint 2 directors in case public co. or 4 directors in case pvt. co. which have been already appointed by the company by filing FORM 32.

What is the use of section 255(2) ??? What happens if this section 255(2) is not there.

Plz.. plz.. make it clear to me.

Behind each and every section of The Companies Act, 1956, there is some kind of Logic.

Behind this section, the logic is very simple.

There are directors in the Company, whose performance is not so well.

Now the board doesn’t want to remove those Directors, because of any kind of reason.

So, at that time, this section came to help of the Members, who have the power to Re-Appoint that kind of Director.

This section will be very helpful in the Government companies, in whose; the disinvestment takes place by larger amount.

Because in the Government companies, there are so many directors, but they are not that much efficient, they are mostly the Government officials, and Lakhs of Rupees of the Public will be wasted in their remuneration.

At that time Members of the Company will remove that kind of Directors U/S 255 & 256

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Ankur Shah (Practicing Company Secretary)

Ahmedabad, Gujarat - 380015

Mobile: +91-90330 03922, 94276 33901

E-Mail: ankur @ csankur.com

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