CAN A DIRECTOR APPOINT A DIRECTOR IF HE IS GOING OUT FOR 5 MNTHS , AN ALTERNATE DIRECTOR ..WILL HIS APPOINTMENT BE VALID
udit sharma
(Company Secretary)
(2303 Points)
Replied 16 February 2011
A Director has no right to appoint his alternate. As per the provisions of section 313 of the Companies Act, 1956 only the Board of Directors of the Company, if authorised by AOA or resolution passed by the shareholders in the General Meeting can appoint an Alternate Director in lace of original Director who is not available in the state where the BM are ordinarily held for a period of more than 3 months.
A Director can nominate a person as his alternate but it is only the Board who can appoint.
God Bless
CS Udit Sharma
AS PER SEC . 312 , ITS AMOUNTS TO ASSIGENMENT OF OFFICE WHICH IS NOT PERMISSIBLE TO DIRECTORS .
AS PER SEC .313 , A INDIVIDUAL DIRECTOR IS NOT HAVING ANY RIGHT TO APPOINT A ALTERNATE DIRECTOR , THE POWER TO APPOINT ALTERNATE DIRECTORT IS WITH BORAD OF DIRECTORS , SO THE DIRECTOR WHO IS GOING OUT FOR 5 MONTHS HAS NO RIGHT TO APPOINT A ALTERNATE DIRECTOR , EVEN BOARD OF DIRECTOR ARE NOT BOUND TO TAKE THE CANDIDATURE IN TO ACCOUNT WHILE APPOINTING AN ALTERNATE DIRECTOR , THE ALTERNATE DIRECTOR IS HAVING ALL THE RIGHT AND DUTIES CAST UPON HIM AS IN HIS INDIVIDUAL CAPACITY , HE IS NOT THE AGENT NOR THE NOMINEE OF THE OUTGOING DIRECTOR , ALTERNATE DIRECTOR IS A DIRECTOR ON HIS OWN RIGHT SO ALL THE PROVISION OF THE COMPANIES ACT APPLY TO HIM IN HIS INDIVIDUAL CAPACITY .
SO , FROM THE ABOVE MENTION FACTS AND CONDITION PRECRIBED UNDER SEC. 312 AND SEC 313 OF COMPANIES ACT THE DIRECTOR APPOINTED BY THE OUTGOING DIRECTOR IS NOT AN ALTERNATE DIRECTOR AND THOSE THE APPOINTMENT IS INVALID AB INTIO .
HENCE FORTH THE APPOINTMENT OF A ALTERNATE DIRECTOR IS NOT VALID
Live Course on Invoice Management System (IMS) - 2nd Batch(With Recording)
CAclubindia
