18 November 2010
Our company is a public compamy (Govt. of M.P. undertaking)we have appointed a Nominee Director in the board meeting.
My question that, whether we need the approval of sharehloders in the next Annual General Meeting to regularize him as required in case of additional directors.
In my opinion, no need to regularize the Nominee Director. Nominee Director will remain on the Board of Directors as determined by the Government of Maharashtra. He will be treated as a regular director right from his appointment by the Government and no need to regularize him.
Nominee Director The article of association of many companies provide that financial institutions and banks which lend money or other financial assistance to the company shall have the right to nominate one or more directors on the Board of the company. These are called nominee directors. The appointment of nominee director shall take effect depending on the provisions in the articles of association of the company concerned. Generally if the nominee are appointed by the SBI, LIC nationalized bank, the nominee take effect from the communication nominating the director received from the respective institutions and banks or the date mentioned in the letter of nomination whichever is earlier. Formal acceptance of the nomination by the Board is not necessary to give effect to such appointment. British Murac Syndicate V. Alperton Rubber co. (1915). However, if the power to appoint nominee director is exercised by other institution/bank, the Board of Directors of the assisted company have to co-opt the nominee director in the Board Meeting or by passing a circular resolution. Thus such appointment take effect from the date of resolution co-opting him on the Board. A nominee director has to file consent for acting as director of a public company and Form 32 will be filed with ROC within 30 days from the date of appointment. Consent letter should be attached in Form 32 for appointment of Nominee Director. Regards
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