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Qualification shares - Nominee Director

Neeta (Finance) (345 Points)

23 February 2010

Hello Members

Please tell me , does a nominee director and alternate director required to take the qualification shares???? The Articles specifies the term director for taking qualification shares.

thanks and regards

neeta

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11 Replies

Ankur Garg (Company Secretary and Compliance Officer) (114773 Points)
Replied 23 February 2010

Generally all the provisions of the companies act, 1956 are applicable to a Nominee director.

However the provisions of companies act, 1956 do not apply to a nominee director appointed under the authority of a special act. In case of some financial institutions (like UTI, LIC and IDBI), the relevant act by which they are constituted, empower them to appoint a nominee director at the board of assisted company. These special provisions giving right of nomination to the financial institution, override the provisions of the companies act, 1956. Hence the provisions of qualification shares are not applicable to such nominee directors.

Regards

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CourseCart.in (Mentor at SHAYVIDZ Academy) (3756 Points)
Replied 23 February 2010

Agreed with Ankur Sir..

n about Alternate director & additional director, they are required to take QS subejct to the provision of AOA..

Ankur Garg (Company Secretary and Compliance Officer) (114773 Points)
Replied 23 February 2010

Please find below some more information:

Nominees of certain Financial Institutions are not liable to retire

Some of the public financial institutions were established under special statutes of Parliament like IDBI, LIC, UTI and SFCs. The respective Act gives the institution overriding power to nominate persons as directors on the Board of loanee companies and to withdraw them at any time. The provisions of the Companies Act, 1956 regarding appointment and removal of directors, share qualifications etc. do not apply to such nominee directors. Therefore, nominee directors of IDBI, LIC, UTI and SFCs are not liable to retirement by rotation in a public company and a private company which is a subsidiary of a public company.

Nominee director of ICICI and IFCI shall be rotational and required to obtain Q.S.

IFCI was also one such institution but after it has been converted as a company under the Companies Act, 1956, the special position that their nominees enjoyed earlier is no longer applicable. Therefore, the nominee of IFCI, ICICI and such other institutions, unless such nominees are appointed against one-third of total strength shall be liable to retirement as per section 255.

The nominee directors representing those financial institutions that are established by a separate statute of parliament are not required to acquire the qualifying shares by virtue of an overriding provision contained in the concerned statute. Those nominee directors who represent the financial institutions which are established as companies under the Companies Act, are excluded from requirement of the qualifying shares by including in the Articles of Association of the concerned company a suitable provision in this regard.

Similarly, directors who under the Articles of Association of the company are not required to hold qualification shares, need not hold them.

CS Ankur Srivastava (Company Secretary & Compliance Officer) (17853 Points)
Replied 23 February 2010

Nominee Directors are not required to obtain Qualification Shares.

However, in case of Alternate Director, if Articles provides Alternate Director shall required to obtain qualification shares within in 2 months of the appointment.

CourseCart.in (Mentor at SHAYVIDZ Academy) (3756 Points)
Replied 23 February 2010

Originally posted by : Ankur Srivastava
	Nominee Directors are not required to obtain Qualification Shares. However, in case of Alternate Director, if Articles provides Alternate Director shall required to obtain qualification shares within in 2 months of the appointment.

NOMINEE DIRECTORS ARE REQUIRED TO TAKE Q.S. NORMALLY..

ONLY IN CERTAIN CASES, THEY ARE NOT REQUIRED TO TAKE Q.S. & THE DETAILS ARE PERFECTLY GIVEN BY ANKUR GARG JI....

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CS Ankur Srivastava (Company Secretary & Compliance Officer) (17853 Points)
Replied 24 February 2010

Oops......... word "not" should not be there. and at last to complete the sentence. " as above explained by Mr. Ankur Garg"

Yes Mr. Adarsh, I am fully agreed with Mr. Ankur Garg explanation...

Neeta (Finance) (345 Points)
Replied 24 February 2010

thank you all of you....... thank you Ankur sir the explanation as regards nominee directors for certain FIs was really an added advantage.

Anup Garg (OM) (54 Points)
Replied 25 February 2010

hi...

is there any provision to allot equity shares in kind (against land), first time allotment.... in a private company.....

plz tell me...

Thanx

Ankur Garg (Company Secretary and Compliance Officer) (114773 Points)
Replied 25 February 2010

Originally posted by : anup
	hi... is there any provision to allot equity shares in kind (against land), first time allotment.... in a private company..... plz tell me... Thanx

Yes this allotment is possible. This is issue of shares for consideration other than cash.

You would have to file Form No. 3 in addition to Form No. 2 as the issue of shares is without consideration.

Regards

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Jagruti (CS) (Service) (1953 Points)
Replied 25 February 2010

Also, if you have already executed any agreement in writing than you have to attach the same alongwith Form 2 in which case you are not required to file FOrm 3 seperatly

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Mishu (CA) (95 Points)
Replied 14 July 2011

in continuation to the above query regarding nominee director

nominee director of LIC is holding 100 shares in a company (jointly in the name of LIC and Nominee director),

LIC withdraws his nomination from the board of the company.

then does nominee director needs to transfer these shares back to LIC.