Concept of addional director

CA Manish (Job) (5264 Points)

13 December 2012  

Concept of Additional Director

Provisions related to appointment of Additional director (Section 260):-

Although Directors are appointed by the shareholders in the General Meeting but section 260 authorize Board to appoint additional directors. Section 260 applies to all companies whether public or private.

 

The Provisions applicable to additional directors are as follows:-

  1. Conditions for appointment:-

 

  •             Articles of the company must authorize the board to appoint additional director.
  •             Additional directors together with the other directors shall not exceed the maximum     strength fixed for the board by the article.

 

  1. Relaxations in the appointment :-

 

  • Section 260 overrides the section 259. Therefore in no case, the approval of GG is            required for appointment of an AD.
  • AD can also be appointed by passing a resolution by circulation.
  • The power of the board to appoint an AD is not affected by the fact that:-
  • The strength of the board fallen below the statutory minimum.
  • The strength of the board fallen below the quorum prescribed by the articles.
  • For the purpose of section 255 the AD shall not be included in the total no of directors.

 

  1. Term of office of the directors :-
  •         He holds office upto the date of next AGM
  •         Here the important point is that use of the upto the date of next AGM not upto the        conclusion of next AGM.
  •         It means whether the AGM is held or not the AD will retire on the date on which AGM should have been held.

 

  1. Position of an AD :-
  • The AD has same rights, powers, duties and liabilities as any other directors.