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APPOINTMENT AND REMOVALOF DIRECTORSSubmitted To: Ms. Kanika AroraPresentation By:Gagandeep SinghGarima Verma

INTRODUCTIONThe administration of the company is in the hands of the directors. They take decision on policy matters. They are not paid servants. They serve in three different ways:

As a Trustee

As an Agent

As a Partner

WHY Directors?

MEANING1. There is no statutory definition of a company director although Section 149(1) of the Companies Act, 2013 does provide that every company shall have a Board Of Directors consisting of individual as Directors.

2. Director includes any person occupying the position of director, by whatever name called. Thus, instead of name, designation or the title, definition of director is based purely on position occupied by him and functions he performs.

Qualification

1. No educational or other qualifications are required in order to become director of the company whether public or private.2. Similarly, the Companies act 2013 does not prescribe any requirement as to age limit for becoming a director. 3. The only condition is that No body corporate, firms or associates can become a director. 4. Only Individual can be a Director of a company because the office of a director is office of responsibility, accountability and position of trust.

Number of DirectorsAs per section 149 (1) every public company shall have 3 directors and every other company shall have at least 2 directors.2. Maximum no. of directors in case of private company shall be as specified by the articles. It could be 15.3. The act does not prescribe any maximum number of directors for public company also but if the maximum no of directors exceed 12, prior approval of central Govt. would be required.4. Thus the approval of central govt will be necessary for the increase in number of directors and not for the appointment .

Appointment Of Director

Appointment By promotersPerson named in the articles of association as directors become the first director of the company or In the absence of the provision in the articles regarding persons to be appointed first directors, the subscribers to the memorandum of association will become the first directors. First directors are to hold office till directors are duly appointed in general meeting.

Appointment by ElectionAccording to Section 152, 1. The members at the general meeting of the company will elect the directors. 2. This is the most common and usual mode of appointing directors.3. The Section further provides that every director would obtain Director Identification Number from the Central Government before he/she acts as a director in any company.

Appointment by nomination by Board of DirectorsThe Board of Directors will fill up the casual vacancy arising among the directors by nomination. Directors so appointed will remain in the office only for the unexpired period for which the director whose post is empty, would have remained in the office.Board has powers to appoint additional directors, casual directors as per the provisions of Section 161, provided authorized by the Articles of Association

APPOINTMENT BY CENTRAL GOVERNMENT1. The central government has the power under section 242 to appoint directors on an order passed by the tribunal (earlier company law board) to effectively safeguard the interest of the company or its shareholders or the public interest to prevent mismanagement.

2. Such directors shall hold office for a period not exceeding three years on any one occasion.

APPOINTMENT BY THIRD PARTIES

1. Section 255 permits that one third of the total number of directors of a public company or a private company which is subsidiary of a public company to be appointed by parties other than share holders on a non-rotational basis.

2. The articles may give right to debenture holders , financial corporations or banking companies who have advanced loans to the company to nominate directors on the board of company.

3. The number of directors so nominated should not exceed one third of the total strength of the board.

4. They are not liable to retire by rotation.

Disqualification of DirectorsAccording to Section 149(1) of the companies Act, 2013, only individual can be appointed as the director. However a person shall not be capable of being appointed as director of the company, ifUnsound MindConvicted by a Court

Removal of DirectorsThe shareholders, the Central Government or the court may remove the directors. The rules regarding the removal of the directors are as follows:

Removal-by shareholdersA company may by ordinary resolution remove a director before the expiry of period of office except in the following cases:

Directors who cannot be removedAn director appointed by the central Government under IDRA Act, 1951 in case of mismanagement and oppression cannot be removed. In a private company a director appointed for life and holding office as such on 1st April 1952 cannot be removed by members resolution. Where the articles of a company provide for the election of directors by proportional representation, a director elected by that method cannot be removed by the resolution.

Special Notice for removal of directorsSpecial notice must be give of the resolution to remove a director, copy of which must be give to the director concerned. The meeting which removes a director can elect another in his place if the director was originally appointed by the election.

Removal by the central GovernmentThe central Government shall by order remove from the office any directors against whom there is a decision of the High Court, holding that he is not a fit or proper person to hold the office of director.