Under Companies Act, 2013 sections 138 to 148 deals with accounts, audit, and auditors. An audi...
Few reappointments of Directors or disqualification of directors are if he is found to be of-
In addition to the requirements mentioned above, the Companies Act further provides that a person shall not be eligible to be appointed as a Director of any other public company for a period of five (5) years from the date on which the public company, in which he or she is a Director, is in default to file annual accounts and annual returns or is in default to repay its deposits or interest thereon or redeem its debentures on the due date or pay dividends declared.
A private company which is not a subsidiary of a public company can provide for additional grounds for disqualification for the appointment of a person as a Director in addition to those specified in the Companies Act.
The provision regarding the retirement of directors by rotation is applicable only for a public company. As per the provisions of the said section 2/3rd of the total number of directors of a public company shall be liable to be retired by rotation. While calculating the 2/3rd of the total number of directors, the Independent Director shall not be counted in the total number.
Shareholders are bestowed with the powers to remove the Directors, as well all know that at the end of the day, directors are answerable to shareholders. Further, Shareholders can also remove a director before the expiry of his tenure, an exception is a case if the director is appointed by Tribunal under the prevention of oppression and mismanagement u/s 242 and if appointed under a principle of proportional representation u/s 163.
A Director can be removed by an ordinary resolution of the general meeting after a special notice has been given, before the expiry of his term of office.
The office of a Director of a public company, or of a private limited company which is a subsidiary of a public company, becomes vacant if he or her:
Also, in such public companies and private companies that are subsidiaries of public companies, if a Director or his or her relative holds an office of profit without the consent of the company, and with such Director’s knowledge, such Director shall be deemed to have vacated his or her office.
In addition to these reasons for the Director’s office becoming vacant, a “pure” private company may prescribe other such reasons in its Articles.
If a person continues to act as a Director, despite knowing that his or her office has become vacant, he shall be punishable with a fine up to five thousand rupees (Rs. 5,000/-) for every day that he or she continues to function and act as such.
The Companies Act is silent with respect to the resignation of Directors. However, in a majority of cases, the Articles provide for Directors to resign. Even in cases where the Articles are silent, there is no absolute bar on Director’s resigning, which becomes effective upon submission of such resignation letter and the filing of the necessary form for such resignation with the Registrar of Companies (whether or not the Board formally accepts the same, unless the Articles provide otherwise). The filing of such resignation related form with Registrar of Companies is an obligation to be discharged by the company in question.
The only exception to the above rule is in the case of Managing, Whole-time and Executive Directors who are employees of the company, and where the terms of their respective service contracts will ordinarily refer to resignations, notice periods and/or compensation in lieu thereof.
Only a Managing Director, a Director holding the office of a Manager and Whole-time Directors can receive compensation for loss of office or consideration for retirement, subject to the conditions specified by the Companies Act.
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