Appointment of nominee director

This query is : Open

Querist : Anonymous

Querist : Anonymous (Querist)

26 September 2014 Suppose a nominee director is replaced by another nominee director, would the provisions of additional director be applicable for his appointment till the conclusion of general meeting and would it require appointment in the general meeting for a further period? Which provisions of CA 13 would be applicable?
Thanks in advance

ACS Gurminder Dhami

ACS Gurminder Dhami (Expert)
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26 September 2014 Dear

Reading of Section 161(3) & section 152(2) says there is no need to appoint nominee director as additional director and no need to regularise him in next AGM

Querist : Anonymous

Querist : Anonymous (Querist)

26 September 2014 Is a ordinary resolution constituting special business be passed? i have noticed in case of Moser Baer India Ltd, and OIL India Ltd., notices have been issued to members mentioning special business and passing of ordinary resolution for appointment of nominee directors in between a financial year. There is no mention of replacement of one nominee director by another. in such a scenario (replacement) would the provisions of passing ordinary resolution be inapplicable?
Please give your valued opinion.
Thanks.

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ACS Gurminder Dhami

ACS Gurminder Dhami (Expert)
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26 September 2014 Dear the companies refered by you appointed their nominee directors before 01.04.2014 ( i.e. before CA 2013)

Under CA1956 there was no provision governing appointment of nominee directors therefor they were appointed as additional director and then regularised at subsequent AGMs.

Under CA 2013 section 152(2) mandates that every director shall be appointed in the general meeting except as otherwise provided in the act.

Reading of section 161(3) makes it clear that the nominee director can be appointed by board and will not be treated as additional director

Querist : Anonymous

Querist : Anonymous (Querist)

26 September 2014 In the case referred to by me the appointment was made on 11th Feb. 2014.

Ankur Garg

Ankur Garg (Expert)
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27 September 2014 Agree with the opinion of fellow expert Mr. Gurminder. Appointment of Nominee director is regulated by section 161(3) and by passing a board resolution you can simply appoint the candidate as Nominee director.

Thanks

Querist : Anonymous

Querist : Anonymous (Querist)

27 September 2014 I agree with the opinion of both the experts but then the appointment was made prior to CA 13 coming into force w.e. f 01.04.14. So logically there should have been this item in the notice as a special business to be transacted as ordinary resolution u/s 161 of CA 13. At the time of appointment on 11.02.14, concept of nominee director was not in existence, hence appointment as additional director. Is my contention correct? If not appointed as additional director what would be the implications?