sakshi (CS) (261 Points)
11 April 2011There are thre directors in a private company who were appointed as additional directors last year and now in the coming AGM we want to regularise them.
How do we do that and do we need to mention this item as special business in the NOTICE??
Thanks in advance
Regards
CA Sandeep Kumar
(Audit Assistant)
(804 Points)
Replied 11 April 2011
Additional director is not a director by rotation and hence he will have to comply with section 257, i.e, has to contest for election as a director at the AGM.
(Section 257 not applicable to private limited company)
(form 32 has to be filed if additional director regularised like a normal director)
sakshi
(CS)
(261 Points)
Replied 11 April 2011
here I want to add one more information the Company is question is a susidiary of a Private Company which in turn is subsidiary of a Public Company.
So will the company in question become subsidiary of a public company and thus will the provisions as are applicable to the subsidiaries of a public company be also applicable to the this company???
kindly guide
CA Sandeep Kumar
(Audit Assistant)
(804 Points)
Replied 11 April 2011
By very definition, the subsidiary of a public company, which is registered as a private company, is a ‘private company’. It means it can have essential characteristics of a private company as defined in section 3(1)(iii), i.e. (a) Restricting right to transfer its shares (b) Limiting number of members to 50 (c) Prohibiting invitation to public to subscribe for shares or debentures of company (d) Prohibiting deposits from persons other than members, directors or their relatives and (e) Minimum capital of Rs one lakh.
The aforesaid ‘essential characteristics’ are mandatory requirements for a private company. Without these conditions, it cannot be a ‘private company’ at all.
Excluding the essential characteristics of a private company u/s 3(1)(iii), it will have all restrictions and prohibitions that a public company has. As per section 12(1), two persons can form a private company. However, as per section 45, a public company must have minimum seven members. Hence, in my opinion , a subsidiary of a public company can be formed with two members, but within 6 months, the members should be increased to seven. Otherwise, all members will incur personal liability of debts of the company. Further, the company should have minimum three directors. Similarly, quorum for general meeting should be five members personally present.
(VS Datey Sir's reply to question raised by me)
CA Sandeep Kumar
(Audit Assistant)
(804 Points)
Replied 11 April 2011
Hi i had raised the same question some time back, so i have posted the reply given by sir. Hope its clear to you now.
sakshi
(CS)
(261 Points)
Replied 11 April 2011
CA Sandeep Kumar
(Audit Assistant)
(804 Points)
Replied 11 April 2011
| Originally posted by : sakshi | ||
 |
Please guide A Limited is a holding Company of B Private LImited. And B Private Limited is a holding Company is a C Private Limited. My question is whether the provisions of "subsidiary of a public company" will be applicable to C Private Limited??? Regards |
 |
Dear Sakshi,
Yes very much. C Private company is a subsidiary of A limited. Similar illustration is provided in the act itself u/s 4. Read illustration given after 4(1)(c) of companies act.
Syam kamal
(Company Secretary)
(156 Points)
Replied 12 April 2011
Additional Directors appointed by the Board of Directors will hold office only up to the next AGM and should be regularized no matter whether it is a pvt or public company.
In your case provisions of "subsidiary of a public company" will be applicable to C Private Limited. Hence the procedures prescribed under Section 257 of the Act should be followed for regularization.
4. To consider and, if thought fit, pass with or without modification(s), the following resolution as an Ordinary Resolution:
“RESOLVED THAT Mr. A who was appointed as an Additional Director of the Company pursuant to Section 260 of the Companies Act, 1956 in the Board meeting held on ----- with effect from that date and who holds the said office up to the date of this Annual General Meeting and a Notice in respect of whom has been received by the Company from a Member signifying his intention to propose the candidature of Mr. A for the Office of Director under Section 257 of the Companies Act, 1956, be and is hereby re-appointed as the Director of the Company with effect from the date of Annual General Meeting whose office shall be liable to retirement by rotation.”
5. To consider and, if thought fit, pass with or without modification(s), the following resolution as an Ordinary Resolution:
“RESOLVED THAT Mr. B who was appointed as an Additional Director of the Company pursuant to Section 260 of the Companies Act, 1956 in the Board meeting held on ----- with effect from that date and who holds the said office up to the date of this Annual General Meeting and a Notice in respect of whom has been received by the Company from a Member signifying his intention to propose the candidature of Mr. B for the Office of Director under Section 257 of the Companies Act, 1956, be and is hereby re-appointed as the Director of the Company with effect from the date of Annual General Meeting .”
EXPLANATORY STATEMENT PURSUANT TO SECTION 173(2) OF THE COMPANIES ACT, 1956
Item No. 4 & 5
The Board has appointed Mr. A, & Mr. B as Additional Directors at its meeting held on --------. These Directors will hold office only up to the date of the AGM.
Mr. A is Chartered Accountant with over ---- years experience both in
Mr. B is a Certified Financial Planner, Master in Business Administration (Finance & Marketing), and a Licentiate of Insurance Institute of India. . Prior to joining, he was employed as ------------ He was also associated with major corporate like -------------, --------- etc
The Company has received separate nominations from members pursuant to Sec 257 of the Companies Act 1956 proposing their candidature along with the requisite deposit.
None of the Directors except Mr. A, and Mr. B are concerned or interested in the resolution.
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