Appointment Of Directors - Company Management & Remuneration
Appointment Of Directors
1. First Directors (Sec.
254 and Clause 64 of Table A)
a. The Articles of a company usually name the first
directors by their respective names or prescribe the method of appointing them.
b. If the first directors are not named in the Articles,
the number of directors and the name of the directors shall be determined in
writing by the subscribers of the Memorandum or a majority of them (Clause 64
of Table A).
c. If the first directors are not appointed in the above
manner, the subscribers of the Memorandum who are individuals become directors
of the company.
2. Appointment
of directors by the company (Secs. 255 to 257, 263 and 264)
Directors must be appointed by
shareholders in general meeting. At least 2/3rds of the total number of
directors shall be liable to retire by rotation. Such directors are called
rotation directors.
Appointment of a new director
(Sec. 257): (1) Fourteen days’ notice and deposit of Rs.500. (2) Consent in
writing to act as director (Sec. 264). (3) Separate ordinary resolution for
each appointment (Sec. 263).
Retirement of directors where
annual general meeting is not held: A director who is to retire by rotation at
the annual general meeting shall not continue in office after the last day on
which the annual general meeting in each year should have been held.
3. Appointment of director by directors (Secs.
260, 262 and 313)
The directors of a company may
appoint directors: (1) As additional directors (Sec. 260), (2) In a casual
vacancy (Sec. 262) and (3) As alternate director (Sec. 313).
4. Appointment of directors by third parties:
The number of directors so
appointed shall not exceed 1/3rd of the total number of directors, and they are
not liable to retire by rotation.
5. Appointment
by proportional representation (Sec. 265):
The system of proportional representation ensures representation of the
minority shareholders on the Board of Directors.
6. Appointment
of directors by the Central Government (Sec. 408):
Any director appointed by the Central Government shall not be required
to hold any qualification shares.
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