Section 257 appointment

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Querist : Anonymous

Querist : Anonymous (Querist)

18 July 2013 Dear Members

Please tell whether a director can be appointed as such as per sec. 257 of Companies Act, 1956 without being first appointed as a additional director or a Director who is liable to retire by rotation.

Rajat Poddar

Rajat Poddar (Expert)
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18 July 2013 A person who is not a retiring director shall, sub- ject to the provisions of this Act, be eligible for appointment to the office of director at any general meeting, if he or some member inte- nding to propose him, has not less than fourteen days before the meeting, left at the office of the company a notice in writing under his hand signifying his candidature for the office of director or the intention of such member to propose him as a candidate for that office, as the case may be 4[ along with a deposit of five hundred rupees which shall be refunded to such person or, as the case may be, to such member, if the person succeeds in getting elected as a director.]

Rajat Poddar

Rajat Poddar (Expert)
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18 July 2013 The company shall inform its members of the candidature of a person for the office of director or the intention of a member to propose such person as a candidate for that office, by serving individual notices on the members not less than seven days before the meeting: Provided that it shall not be necessary for the company to serve individual notices upon the members as aforesaid if the company advertises such candidature or intention not less than seven days before the meeting in at least two newspapers circulating in the place where the registered office of the company is located, of which one is published in the English language and the other in the regional language of that place.]

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CS,CA F,Numrologi TusharSampat

CS,CA F,Numrologi TusharSampat (Expert)
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18 July 2013 perfectly explained by Mr rajat.

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Querist : Anonymous

Querist : Anonymous (Querist)

18 July 2013 means a person has to be a additional director first for being appointed as director

Ajay Mishra

Ajay Mishra (Expert)
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18 July 2013 The query is whether a person is directly appoint as director under section 257......

The answer is yes.

A public company or a private limited company which is a subsidiary of public company can directly appoint a direct through general meeting under section 257 and such person will be liable to retire by rotation.

This section is not applicable to private limited company.

Querist : Anonymous

Querist : Anonymous (Querist)

18 July 2013 thanks Ajay sir.. now i have got my answer... but where it is written that he will be liable to retire by rotation? pls clarify sir?

Querist : Anonymous

Querist : Anonymous (Querist)

18 July 2013 sir it is given under section 255.. right?

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Ajay Mishra

Ajay Mishra (Expert)
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18 July 2013 Hi

every director appointed under section 257 will automatically covered under section 255 and 256.

A person who is appointed at general meeting is subject to section 255 and 256.

Read the heading of section 257, it specifically restrict the retiring director to come under section 257.

On the other hand, if such person will not liable to retire then who will retire in up coming AGM.

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Querist : Anonymous

Querist : Anonymous (Querist)

18 July 2013 ok thnks very much sir.. but how directors are appointed in pvt companies under section 260? and how tyey r regularized

Rajat Poddar

Rajat Poddar (Expert)
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18 July 2013 sorry .. i did not read the query properly.. Ajay sir..have explained perfectly.. completely agree with him..

Ajay Mishra

Ajay Mishra (Expert)
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18 July 2013 Procedure for Appointment of Additional Directors.

1. Take consent of director and DIN/disclosure of interest
2. Call a Board Meeting for proposal of appointment of director
3. Hold a Board Meeting and appoint him as additional director.
4. File Form-32, with ROC, with in 30 days from the date of appointment.
5. Attach consent letter with Form-32, in case of public limited company.
6. Take entry in Minutes.

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Ajay Mishra

Ajay Mishra (Expert)
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18 July 2013
The provision of section 255,256 and 257 is not applicable to private limited company, so you can take the benefit of section 257 by applying them on private limited company as good corporate practice.

Procedure for Regularisation of Additional Directors.

1. Call a Board Meeting for proposal of regularization of director
2. Hold a Board Meeting and call general meeting.
3. Hold a General Meeting for passing of resolution under section 257 to regularize the additional director.
4. File Form-32, with ROC, of change in position of director attach certified copy of shareholders meeting.
5. Take entry in Minutes.

Querist : Anonymous

Querist : Anonymous (Querist)

18 July 2013 thnks very much sir for all the info.. now i got ur point...

Ajay Mishra

Ajay Mishra (Expert)
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18 July 2013 My pleasure dear.....

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