level management, is responsible for ensuring the smooth functioning and decision making in any company. To appoint, elect or de-elect a member from the group of people who exercise utmost authority in Corporate Governance is a matter that has received significant legal attention. Therefore, certain procedures and provisions have been laid under “The Company’s Act (Amendment) 2013” dictating the terms of appointment and removal of directors in a company. According to the new provisions under the amendment act, only individuals shall be deemed to be the directors of the company i.e. no artificial legal entity/person (for example, another corporate firm) shall be allowed to hold the position. These provisions are discussed below: Numbers of directors allowed as per Section 149(1)(a)
Additionally, according to Section 255, in a private company multiple directors may be appointed by passing a single resolution. In case of a public company, each director is appointed by passing a separate resolution. However, a number of steps have to be followed for the appointment of directors in different classes. Broadly, these steps can be classified into five ways: 1. Appointment of the first Director The first director(s) of a company are determined during the incorporation of a company by their consent in writing along with a signed agreement to take the qualification shares (which is not required in case of a company not having a share capital). Such directors are usually appointed by name in the Articles. 2. Appointment at general meeting (Section 255)
3. Appointment by the Board (Section 260) The existing board of directors have the power to appoint new directors in the following cases:
4. Appointment by proportional representation Section 265 provides an option to represent the minority shareholders on the board and have a proportional representation by providing in its AoA. Appointments of these kinds may be made once in three years. 5. Appointments of directors by central government (Section 408) pon an order of the Tribunal, the central government has the power to appoint and remove any directors to prevent oppression and/or mismanagement. The directors so appointed may serve for maximum of three years, and they are not required to retire by rotation or to hold the qualification shares. Removal of Directors
Re-appointment of the directors can be done at AGM (Annual General Meeting) as prescribed by the articles of the company. Author Bio: George Dille is a marketing expert by profession and he works for a company- "Business Ventures India" which provide their clients online company registration services. He loves to share useful information about business tips.
2 Comments
1/30/2023 06:33:38 am
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4/2/2023 11:22:44 pm
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