A private limted co. has got only two foreign directors and the comapny wants to hold its first AGM. But the foreign directors are not in a position to come to India now. 1) CAn appoint 2 alternate directors in their place? 2) will the presence of 2 alternate directors at the AGM constitute the valid quorum. 3) If so, who should sign the minutes of the meeting?
Pursuant to the provisions of section 313 of the Companies Act, 1956 the BOD if authorised by AOA or a resolution passed by the Company in the General Meeting can appoint a person as an Alternate to a Director who will not be avialble for a period of not less than 3 months in the state where the Board Meetings are ordinarily held and the person appointed as Alternate Director shall vacate his office as such as soon as the Original Director return to the state where the BM are ordianrily held.
In my opinion the concept of Alternate Director was introduced so that the business of the company does not gets hindered due to the physical absence of the Original Director from the state where the BM are ordinarily held.
In your case, if both the Directors are unable to attend the AGM of the Company, then the following procedure should be adopted:
1 Alternate Directors can be appointed in place of both the foreign Directors to attend the AGM provided both of them should not be available in the state where the BM are ordinarily held say in the state of gujarat where the regd. office of the Company is situated for a continuous period of not less than 3 months.
2. Convene a BM and pass seperate resolutions for appointment of Alternate Directors.
3. File Form 32 for appointment of Alternate Directors within 30 days from the date of their appointment.
4. Coming to your 2nd question, presence of the Directors is not to be taken into consideration for ascertaining the quorum of the GM. What matters is the presence of 5 members personally in case of Public Company and 2members personally in case of any other Company shall constitute a valid quorum for the General Meeting.
5. The minutes of the GM should be signed by the Chairman of the meeting or by a Director duly authorised by the Board of Directors in this behalf.
6. So if the Chairman of the BOD is also the Chairman of the GM in your Company, Alternate Director appointed in place of the Chairman of the Board shall not automatically chair the GM. In the absence of the Chairman, the members present shall elect one of them to be the Chairman of the meeting and he shall sign the minutes of the General Meeting.
This is my interpretation and the views of eminent experts are welcome!
10 November 2010
DEAr Sir, Many thanks for responding...
In the company which I specified, the two foreign directors are the only two members. So how can the company satisfy the need of quorum? Kinldy suggest the way out.
Can the alternate director appointed as the chairman of the AGM sign the minutes of the AGM and Board Meetings?
As per my understanding if the company has only two director and these are foreigner and they want to appoint alternate director.
The question is who will appoint alternate director in place of original director because when both option is going to avail, the presence of both foreign director/manager is mandatory, without this meeting is not possible.
16 November 2010
The Co. has got a Indian shareholder just with nominal shares. Can One of foreign director appoint a alternate director in his place for attending the AGM and the other foreign director attend the AGM in person ? Will the above three - nominal shareholder, alternate director, foreign director be the sufficient quorum for the AGM. Kinldy guide me.
CAclubindia
