Director appointed under casual vacancy

Brief writeup on Section 262

Appointment of DIRECTOR to fill the casual vacancy

In case of Public Company or a Private Company which is a subsidiary of a Public Company, the Board of Directors are empowered by to fill the casual vacancy in the office of any director. In case of any casual vacancy in the office of the Director appointed by the Company in General Meeting is vacated before his term of office will expire in normal course, the resulting casual vacancy may, subject to any regulations in the articles of the company, be filled by the Board of directors at a meeting of the Board.

The person appointed to fill the casual vacancy of the Board shall hold office only upto the date upto which the director in whose place he is appointed would have held office if it had not been vacated.

Explanations:

1. Applies in case of public company only;
2. Vacancy must be Casual;
3. Casual vacancy is in the office of the Director appointed by the Company in General Meeting and not any other director;
4. Appointment in casual vacancy is subject to the regulations in the Articles;
5. The vacancy may be filled in duly executed board meeting and not by way of circulation.
6. The person appointed to fill the casual vacancy will hold the office of director to complete the term of original director and is not required to be regularized as Additional Director.

However, there is no requirement to fill the casual vacancy, it is on the discretion of the Board to appoint a director to fill the casual vacancy or not and to appoint a director as a Director appointed to fill the casual vacancy under section 262 or otherwise. However, if due to casual vacancy, the number of directors falls below the numbers of directors required under Companies Act, 1956 or Listing Agreement. The Company should immediately appoint a director to complete the constitution of the Board.

Legality of the director appointed under section 262 :

The appointment of director may be done in General meeting under Section 257 and if desired, the Board of Director are also authorize to appoint Directors under Section 260, 262 and 313.

All of above directors appointed under various sections are having the same powers, rights and liabilities, however, their tenure may vary according to their terms of appointment provided under the respective section.

Under Section 262, Director appointed to fill the casual vacancy is also the Director of the Company having same rights, liability, obligations and duties as was shouldered by the original Director.

The definition of the term Director under Section 2(13) also clarifies the same. The definition of the term director is as under:

“Director includes any person occupying the position of director, by whatever name called.”

It is an inclusive definition and well includes the director appointed to fill the casual vacancy.

Regards:

Ankur Srivastava

Company Secretary