Originally posted by : pardeep bansal
	Mr Garg,  i am not asking from the point of view of resigning director... i am asking about the legal picture of the company with just one director. Even for the time being. plz read my earlier question again. I am asking abt the legal status of the company during the period it has only one director. Plz dont keep in mind the original question raised by Mr Ajay R

There is no such problem for the company as we can file form 32 for appointment wit late fee.

For example out of Mr. A and B -------Mr. B resignes from March 10, 2010. Now there remains only one director. Understand here u can not file form 32 for Mr. B.

Later on to fill the gap you may appoint Mr. C from March 05, 2010 (From back date). First upload form 32 for appointment and get it approved from MCA. After that upload form 32 for Mr. B which is pending.

There is no point discussing liability of company with 1 director when solution is provided by the system itself.

However for violation of section 252 penalty u/s 629A would be applicable.

Originally posted by : pardeep bansal
	Mr Garg, I know you are irritated by my foolish questions. But Sir you are the expert of this topic. so kindly answe my last question. so i ask my question again. Suppose a director resign on 1-1-2010 but the new director gives his consent to act as a director on 10-1-2010. I want to know what shall be the status of company during 1-1-2010 to 10-1-2010. Can i company be a running company during 1-1-2010 to 10-1-2010.

In case of violation of section u/s 252 if ROC objected (.05% chances only) you can easily explain the true situation to any authority. However any decision taken by single director during 10 days would be invalid for sure.

Further these 10 days cannot stop the running of a company.

Revert for any doubt.

Mr garg, although u have said very clearly that any decision taken by single director will be invalid. but if single director takes any decision and the company later on ratify those decision in its board meeting or EGM, after appointment of 2nd director. will the decisions taken by single director be valid thereafter?

The problem of 10 days is a problem of the company and not of Law. Moreover the acts of 1 director would be void ab-initio read with section 252. Hence there is no question of rectification. But this is my personal opinion. You may follow your own funda.

Thanks

One the resignation is given by the Director, the board has to accept the same as no one can force to reject the resignation of directorship of any director. Once the Director is resigned you have to file Form 32 with in 30 days.

Nobody can Forecemajure any person from being resigned from the Directorship.

And no company can run without 2 directors, its s statutory requirement. You have to make atleast one director appointed before the resignation date of the resigning director. So inthis senarios first you appoint a director and file form 32 and thereafter file form 32 for the resignation.

One-man directorship and decisions taken by him wil be void in effect and is aganist companies act.

If I am wrong kindly correct me....

Rgds

Jithesh

Thanks Mr Garg.. everything is clear now

Originally posted by : pardeep bansal
	Thanks Mr Garg.. everything is clear now

You are most welcome sir !!!

Originally posted by : Ankur Garg
	Originally posted by : pardeep bansal Thanks Mr Garg.. everything is clear now   You are most welcome sir !!!

Dear sir, though the discussion is over, i wish to add somthing in that.

As we know minimum two directors require on the board of Pvt. Ltd. co., if one director wish to resign then there is need to appoint new director before his resignation as single director can't constitute quorum.

To make the picture more clear let me take the example of Public Co., Suppose 7 directors on the board  and one of them wish resign, in that case there is no need to appoint new director before his resignation as remaining directors(i.e 6) can constitute quorum to appoint a new director in his (retiring Director) place in the board meeting. 

Further, As per section 45 of the Co. Acts if no. of memebers of a co. falls below the statutory limit and co. carry on business for profit for more tham 6 months then the liability of remaining directors become unlimited after 6 months . 

Once the minimum number of 7 members is fall, the status of the company as Public Ltd will stand void. Before falling the minimum number below 7, the company has to ake atleast an arrangement for making it to 7 members, otherwise the company status as Public Ltd will be questioned by law. 

And In the above query the minimum no of diretors in a public comany is 3 not 7 , so even if the once director goes, it will be valid

Kindly rectify me if I am wrong

Thanks for reply.

Yes, it is minimum 3 directors in public co. which was wrongly mentioned by me.

Secondly, if minimum number of 7 members is fall, the company status as Public Ltd will be questioned by law, then what is significance of section 45 of Co. Act. Does it allow a company to appoint a director (if falls below statutory limit) within 6 months?

You can appoint the member within 6 months, provided what all liabilities arising out at the time of the below minimum number of members has to be suffered and sustained severally by all members if it is more than 6 months.

Kindly rectify me If I am wrong

If you try to file Form 32 for resignation once the minimum number of directors may fall, teh MCA portal will not allow you to upload, it will show prescrutiny errors as minimum number of directors should be there.

According to me you have to appoint one director there after only you can remove a director if such removal will make the number of directors below.

This is my view :)

Yes, liabilities of remianing directors becom unlimited after the expiry of 6 months, i hav stated the same earlier.

As far as question of uploading the form on MCA is concerned, I'll take care of it in future.

Thanks for ur valuable views.

Originally posted by : CS Narendra Verma
	Yes, liabilities of remianing directors becom unlimited after the expiry of 6 months, i hav stated the same earlier. As far as question of uploading the form on MCA is concerned, I'll take care of it in future. Thanks for ur valuable views.

Dear Narendra,

I want clear one small point to u regarding DIRECTOR(Sec322&323for directors unlimited liability) and MEMBER(Sec45 says about Members only) :-

Section 45

MEMBERS SEVERALLY LIABLE FOR DEBTS WHERE BUSINESS CARRIED ON WITH FEWER THAN SEVEN, OR IN THE CASE OF A PRIVATE COMPANY, TWO MEMBERS.

  
If at any time the number of members of a company is reduced, in the case of public company, below seven, or in the case of private company, below two, and the company carrier on business for more than six months while the number is so reduced, every person who is a member of the company during the time that it so carries on business after those six months and is cognizant of the fact that it is carrying on business with fewer than seven members or two members, as the case may be, shall be severally liable for the payment of the whole debts of the company contracted during that time, and may be severally sued therefor.

Section 322
DIRECTORS, ETC., WITH UNLIMITED LIABILITY IN LIMITED COMPANY.
(1) In a limited company, the liability of the directors or of any director, [or of the managing agent, secretaries and treasurers] or manager may, if so provided by the memorandum, be unlimited.
(2) In a limited company in which the liability of a director, or manager is unlimited, the directors, and the manager of the company, and the member who proposes a person for appointment to the office of director, or manager, shall add to that proposal a statement that the liability of the person holding that office will be unlimited; and before the person accepts the office or acts therein, notice in writing that his liability will be unlimited, shall be given to him by the following or one of the following persons, namely, the promoters of the company, its directors, or manager, if any,
and its officers.
(3) If any director, manager or proposer makes default in adding such a statement, or if any promoter, director, manager or officer of the company makes default in giving such a notice, he shall be punishable with fine which may extend to one thousand rupees and shall also be liable for any damage which the person so appointed may sustain from the default; but the liability of the person appointed shall not be affected by the default.

Section 323
SPECIAL RESOLUTION OF LIMITED COMPANY MAKING LIABILITY OF DIRECTORS, ETC., UNLIMITED.
(1) A limited company may, if so authorised by its articles, by special resolution, alter its memorandum so as to render unlimited the liability of its directors or of any director or manager.
(2) Upon the passing of any such special resolution, the provisions there of shall be as valid as if they had been originally contained in the memorandum :
Provided that no alteration of the memorandum making the liability of any of the officers referred to in sub-section (1) unlimited shall apply to such officer, if he was holding the office from before the date of the alteration, until the expiry of his then term, unless he has accorded his consent to his liability becoming unlimited.

thanx adarsh.