Nominee Director.........Urgent

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

Thank you Sir,

But my questions are  whether we required to file form 32 again or not.

Is it necessary to pass resolution in GM, too, for appointement of Nominee Director already appointed in BM?

Hi

It is not required to take General Meeting permission for nominee director for which a Board have already take note of such appointment.

Regards

Hello Mr Ajay

My query is whether firm can be appointed as Director of Company through its representative. If yes, then in which category will he be appointed . Whether he will be apppointed as Nominee Director. If yes, then  AOA of my Company does not provide appointment of Nominee Director. It is silent on this issue.Also, My Company does not  have any contractual agreement with the firm. Can it still appoint its representative as Nomineee Director on the Board of Company.

Also, What will be the liability of the Nomineee Director ?

Also do I have to amnend my AOA first for his appointment?

Pl reply asap

Thanks & Regards

Kamal

As per Section 253 only individuals can be appointed as Directors. A firm cannot be appointed as Director. Nominee directors are appointed generally by the financial institutions who have lent money to the company to protect their interests. Your case will not fall under the category of Nominee Director.

Thanks Jayashree

I know that as per Sec253 only individuals can be appted as Director . But in Ramaiya, there is a decided case of 'Motion Pictures Assn. Re (1984)' which cites that the representative of the firm may be elected or nominated as Director.PL comment on this. Also u have written that nominee Directors are generally  appted by F.I. but this is not necessary. Nomineee dIrector can be appted if there is financial stake in the Company like major shareholding or some contractual agreement is there .

Regards

KAMAL

sir, can u please tell me how to draft a board resolution for appointment of a nominee.some sample letter or format. it is urgent.