CA Pushpendra Gaur (CA in L & T) (2843 Points)
30 September 2009plz tell if after appointing the additional directors the limit for the directors is going to extend beyond 12. in such case is the permission of central govt. is reqd
CA. Dashrath Maheshwari
(TaXpert)
(15103 Points)
Replied 30 September 2009
Ankur is right, Permission needed in such a case
Ankur Garg
(Company Secretary and Compliance Officer)
(114773 Points)
Replied 01 October 2009
Disagree with both the learned members.
If you go by the language of Section-260 and interpretation involved in Section-260 no need to take Central Govt. approval for the appointment of Additional Director at the 13th place in the Board of Directors.
As per Section nothing contained in section 258 and 259 shall affect any power of the board to appoint additional director. However before Regularisation of such additional director in the next AGM you must obtain approval of Central Govt.
Kindly correct me if I am wrong.
Best Regards
MOHIT MAHAJAN
(LCS, ACA)
(2050 Points)
Replied 01 October 2009
Sec. 260 overrides Sec 259, hence if additional director is appointed only till next AGM then no approval of CG is required. However The number of directors & additional directors should not exceed the maximum strength fixed by article.
Sir I have read one more provision in this regard, hope it can also be considered here...
Approval of CG is also not required if no. of directors dont exceed---
-the maximum no. of directors specified in articles first registered, or
-12, whichever is higher
Hence if in the article first registered, maximum no. of directors allowed is say 15, even then approval of CG wont be required in case the no. of directors is increased to more than 12 but dont exceed 15.
Vaibhav Shukla
(Company Secretary)
(142 Points)
Replied 01 October 2009
Dear Mohit,
In respect of ur contention that the Approval of CG is also not required if no. of directors don't exceed maximum no. of directors specified in articles first registered, or-12, whichever is higher Hence if in the article first registered, maximum no. of directors allowed is say 15, even then approval of CG wont be required in case the no. of directors is increased to more than 12 but dont exceed 15.i woud like u to go thru the proviso to sec.259 wherein it is clearly given that if the permissible max. is 12 or less than 12 no approval of C.G. shall be required and if it does exceed 12 C.G. approval wud be required.Thus in any case if the no. of Directors increase beyond 12 C.G. approval is required.
THANX & REGARDS
VAIBHAV
CA Pushpendra Gaur
(CA in L & T)
(2843 Points)
Replied 01 October 2009
Dear Vaibhav Sir,
i am 100 % satisfied with ur reply that permission is essential, otherwise everycompany would appoint additional directors to extend the same beyond 12
Pushpendra
MOHIT MAHAJAN
(LCS, ACA)
(2050 Points)
Replied 01 October 2009
Vaibhav sir thnx for your clarification. I still have one doubt that if in any case CG permission is required for increase in no. of directors beyond 12 then what's the role of words "whichever is higher" ? Please clarify.
CG permission is required.
First we elaborate the provision of Section 260 & then understand why CG approval is required.
Section 260 ADDITIONAL DIRECTORS: Nothing in section 255, 258 or 259 shall affect any power conferred on the Board of directors by the articles to appoint additional directors:
Provided that such additional directors shall hold office only up to the date of the next annual general meeting of the company:
Provided further that the number of the directors and additional directors together shall not exceed the maximum strength fixed for the Board by the articles.
-------------------------
Section 260 clearly says that the no. of directors & additional directors should not exceed the limit fixed by board. (see the highlited word of section 260)
So, Approval must be taken.
Note: the maximum limit should be described in the Articles of Association made at the time of Incorporation of the company,
If the articles was subsequently altered than it shall have no effect. and it can not override section 259.
See
Section 259(b) in the case of a company which came or may come into existence after that date, an increase which is within the permissible maximum under its articles as first registered,
Ankur Garg
(Company Secretary and Compliance Officer)
(114773 Points)
Replied 06 October 2009
No benefit to give any justification. Section 260 overrules section 255, 258 and 259.
So no need to take Central Govt. approval for the appointment of Additional Director at the 13th place in the Board of Directors. However before Regularisation of such additional director in the next AGM you must obtain approval of Central Govt. The above view is also supported by well known law expert Mr. A Rammiya. Pushpendra, You may go for any legal consultancy in the world no body can reject overruling power of section 260. Still if you file application with CG, the department will return the application by its comment "No need to file application". Regards
CA Pushpendra Gaur
(CA in L & T)
(2843 Points)
Replied 06 October 2009
Dear Ankur SIr;
Don't you think if permission of CG is not necessary then every company will have 12 Regular Directors and every year after the AGM is over, the very next day, they shall be reappointed again in Board meeting, Thus, easily company can maintain more than 12 Direcctors.
Pushpendra
Ankur Garg
(Company Secretary and Compliance Officer)
(114773 Points)
Replied 06 October 2009
Pushpendra,
We discuss the same loophole in our class 6 year back. There are many situations in company law like this one. If you can take benefit then go ahead...as everybody is using...
CA Pushpendra Gaur
(CA in L & T)
(2843 Points)
Replied 06 October 2009
thanx for the reply send me ur email id
my one is
sunny_m5656 @ yahoo.co.in
for any law query
Pushpendra
CAclubindia
