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Section 255 and 256

18 June 2010

Can anyone define/decribe Sections 255(2) and 256 (1) word by word because I am not able to understand these sections so far and also how to apply them practically. I never ever understand their meaning.

Thanks in advance.

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6 Replies

(Guest)

Section 255(2) talks that you can retire more no. of directors at AGM

e.g. If 3 Directors are retiring as per the Section 256(1) and there are 6 directors, You can retire 4 Directors also. Minimum 3 Directors must retire, U can have more no. of Retiring directors also.

Section 256(1) talks about, deciding the Minimum no. of the Directors, that is required to be retire at the AGM.

Vikram Yadav (CS) (53 Points)
Replied 18 June 2010

Thanks for your reply, but still it is not clear as section 255 (2) talks about appointment not retirement. at all.

In section 256 (1) talks about minimum no. of Directors...1/3 but 255 (1) talks about 2/3 why????

So confusing pleas make it clear to me.

Ankur Garg (Company Secretary and Compliance Officer) (114773 Points)
Replied 18 June 2010

Please follow the link given below as it may help you to understand the sections:

CALCULATION UNDER 255, 256

Vikram Yadav (CS) (53 Points)
Replied 19 June 2010

Now, sections 255 (1) and 256 (1) is clear to me.

But, what is the use of section 255(2)??? what it says???

Please make it clear to me...

Thanks!!!

Ankur Garg (Company Secretary and Compliance Officer) (114773 Points)
Replied 19 June 2010

Hi,

Happy to see that you understand the section

In sub section (2) of section 255 law is suggesting the appointment method of remaining 1/3^rddirectors who are non-rotational directors.

And according to this method the remaining 1/3^rddirectors who are non-rotational directors shall, in default of and subject to any regulations in the articles of the company, also be appointed by the company in general meeting in:

1. A purely private company which is not subsidiary of a public company; or

2. In a public company or a private company which is subsidiary of a public company.

Thanks

Vikram Yadav (CS) (53 Points)
Replied 19 June 2010

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.