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In case of Re-appointment of independent director for second term, whether ordinary or special resolution is required to be passed?
When an independent director is being reappointed for a second term, the shareholders’ approval at the general meeting is required by passing an ordinary resolution. There is no need to pass a special resolution for this purpose. Section 149(10):This section permits the appointment of a director (inRead more
When an independent director is being reappointed for a second term, the shareholders’ approval at the general meeting is required by passing an ordinary resolution. There is no need to pass a special resolution for this purpose.
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See lessSection 149(10):
This section permits the appointment of a director (including an independent director) for a term of up to five years.
Section 149(11):
This section states that “no independent director shall hold office for more than two consecutive terms.” It does not specify that a special resolution is necessary for the reappointment; rather, the reappointment is subject to ratification in the general meeting by an ordinary resolution.
Whether an independent director may continue to be an ID for maximum two terms, even if each such term is less than 5 years.
Yes, Under the Companies Act, 2013, the term of an independent director is subject to a two-term limit—even if each term is less than five years. Specifically: Section 149(10) of the Act allows an independent director to be appointed for a term of up to five consecutive years. Section 149(11) providRead more
Yes,
Under the Companies Act, 2013, the term of an independent director is subject to a two-term limit—even if each term is less than five years. Specifically:
Section 149(10) of the Act allows an independent director to be appointed for a term of up to five consecutive years.
Section 149(11) provides that “notwithstanding anything contained in sub-section (10), no independent director shall hold office for more than two consecutive terms,” which means that even if each term is shorter than five years, the maximum number of consecutive terms an independent director can serve is two.
For example, if an independent director is appointed for a term of three years and then reappointed for a second term of three years, they cannot be immediately reappointed for a third consecutive term without a break. They must wait for a period (typically three years) after ceasing to be an independent director before they can be reappointed.
This provision ensures a regular infusion of fresh perspectives on the board, maintaining the independence and effectiveness of corporate governance.
See lessCan an alternate director be appointed for an independent director?
Yes, an alternate director can be appointed for an independent director, but with important conditions. Specifically, the person proposed as an alternate must satisfy all the qualification criteria required for independent directors. This is mandated by the Companies Act, 2013, which states that noRead more
Yes, an alternate director can be appointed for an independent director, but with important conditions. Specifically, the person proposed as an alternate must satisfy all the qualification criteria required for independent directors. This is mandated by the Companies Act, 2013, which states that no one can be appointed as an alternate director for an independent director unless he is qualified to be an independent director.
Additionally, it’s important to note that for listed companies, regulatory amendments effective from October 1, 2018, have restricted the practice—meaning listed entities are not permitted to appoint alternate directors for their independent directors.
See lessWhen does the resignation of a director become effective?
Under Section 168 of the Companies Act, 2013, a director’s resignation becomes effective on the date the company receives the resignation notice, unless the notice specifies a later effective date. This means that once the director submits his resignation in writing to the company, his office is conRead more
Under Section 168 of the Companies Act, 2013, a director’s resignation becomes effective on the date the company receives the resignation notice, unless the notice specifies a later effective date. This means that once the director submits his resignation in writing to the company, his office is considered vacated from the receipt date (or the date stated in the notice) regardless of whether the company subsequently communicates the resignation to the Registrar of Companies.
For instance, if a director submits his resignation via email or physical notice on April 1, and no later date is mentioned, his resignation is effective from April 1. If a later effective date is mentioned in the notice, then his resignation will take effect on that specified date.
See lessIs sitting fees payable to a director who participates through video conferencing ?
Yes, sitting fees are payable to a director who participates via video conferencing, provided that their participation is recorded as attendance at the meeting. The Companies Act, 2013 and the associated rules do not differentiate between physical and virtual presence for the purpose of awarding sitRead more
Yes, sitting fees are payable to a director who participates via video conferencing, provided that their participation is recorded as attendance at the meeting. The Companies Act, 2013 and the associated rules do not differentiate between physical and virtual presence for the purpose of awarding sitting fees. In essence:
See lessDoes an alternate director need to obtain a Director Identification Number under Section 153 of the Companies Act, 2013 ?
Yes, an alternate director is required to obtain a Director Identification Number (DIN) under Section 153 of the Companies Act, 2013. The requirement for a DIN applies to every person who is appointed as a director, and this includes alternate directors. Their role, though temporary, is still that oRead more
Yes, an alternate director is required to obtain a Director Identification Number (DIN) under Section 153 of the Companies Act, 2013. The requirement for a DIN applies to every person who is appointed as a director, and this includes alternate directors. Their role, though temporary, is still that of a director under the Act, and therefore they must secure a DIN before they can effectively perform their duties on the board.
See lessFor directorship,Whether section 8 companies and foreign subsidiary companies are covered in the limit of 20 companies?
Under the Companies Act, 2013, the limit of directorships (i.e. holding office as a director in not more than 20 companies) applies to companies incorporated in India. This means: Section 8 Companies:Since Section 8 companies are incorporated under the Companies Act, 2013 (even though they are non-pRead more
Under the Companies Act, 2013, the limit of directorships (i.e. holding office as a director in not more than 20 companies) applies to companies incorporated in India. This means:
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See lessSection 8 Companies:
Since Section 8 companies are incorporated under the Companies Act, 2013 (even though they are non-profit in nature), a directorship in a Section 8 company does count toward the limit of 20 companies.
Foreign Subsidiary Companies:
A foreign subsidiary company is incorporated outside India and is governed by the laws of that jurisdiction. Therefore, a directorship in a foreign subsidiary is not covered by the Indian Companies Act and does not count toward the limit of 20 companies.