Dear Ankur,

I agree with you that First calculate 2/3 by considering the entire strength of board i.e. 2/3 of 7 which comes to 5 (after round off). Right. First stage clear.

Also agree that now we should put safe directors in 1/3 bracket. This 1/3 bracket may contain MD, WTD, and directors appointed by statutory authorities. 

It virtually means we can have max. 2 non rotational directors in this case. However there can be less than 2 non rotational directors.

Confusion is in second calculation. 

According to me 1/3rd should be calculated for 6 directors (not for 5 director), since, in this case, as per section 255 atleast 5 directors (minimum) should be rotational director. Meaning thereby minimum 5 directors should be rotational. However it can be more than 5. Here there is one MD, so rotational directors for the purpose of this section are 6. 

Provision of section 255 are not contravened since if we take rotational directors = 6 then we comply with section 255 as it says MINIMUM (ATLEAST) rotational directors = 5.

Agree

Now as per section 266, at every annual general meeting, one-third of the directors liable to retirement by rotation will retire. 

Hence according to me 2 directors will retire in AGM (being 1/3 of 6)

Regards

Originally posted by : Neha Jain
	According to me 1/3rd should be calculated for 6 directors (not for 5 director),

This statement is a kind of incorrect one bcoz you are saying it should be 6.

Actually the problem lies in first calculation of section 255 i.e. fixing number of director falling under rotational category. Second calculations is extremely flat.

According to me it “may be 6” bcoz of “not less than 2/3 clause”. I am very well aware of the use of this clause as in case of absence of MD designation in current we can treat the entire number of 7 directors as rotational directors.

Actually it is not like provision of section 255 are not contravened if we take rotational directors = 6 instead of 5. Actual figure calculated under section 255 is 5 which may increase to 6 but one cannot claim it to be 6 especially on a platform of CCI. Further I don’t see any point to unnecessarily treat 5 as 6 just because space of 1 is free. For a fresher student/professional flat calculation is very harmful…..and most of the coaching institutes fail to plug this loophole.

Simply putting the conclusion like “1/3rd should be calculated for 6 directors” may be misleading for a person first time handling section 255 and 256. This is what I feel reading your first reply. Now I realised your personal understanding in mind is fine.

Further unclear calculations method may defeat the calculation in different board structure like different number of directors, different designations etc…..

Thanks

Thanks a ton Ankur Ji for a very nice deliberation. I always appreciate your passion and priority to understand the basic funda of law by implementing it in a manner which is close to 100% accuracy and free of manipulation and biased interpretation. Here when we are discussing any issue on CCI plateform, core focus is on healthy discussion to understand gist of provision and apply it in our corporate working in the most appropriate and safe manner.

It will be very kind of you, if you pls do the following calculation :

Situation 1.

Let us assume A, B, C, D, E, F, G are the directors. If we take 7 directors (with no MD) then what will be the calculation of directors retiring by rotation as per section 256 in year 2012, 2013, 2014 and 2015 considering retiring directors are appointed in the corrosponding AGM in which they are retiring and  A is longest in office followed by B, C, D, E, F, G.?

Situation 2.

If we take 7 directors (with 1 MD) then the calculation of directors retiring by rotation as per section 256 will be 2. Right. Let us assume A, B, C, D, E, F, G are the directors and A is the MD and B is longest in office followed by C, D, E, F, G. Pls elaborate which directors will retire in the year AGM held in year 2012, 2013, 2014 and 2015 considering retiring directors are appointed in the corrosponding AGM in which they are retiring.

Thanks and Regards

Before solving the situations let me tell you the exact point you are looking forward to see in advance or rather I would say tempted you to post these situations. Otherwise I can presume these two situations are quite easy for you.

In situation 2: I am going to put Mr. A (being MD) and Mr. G in 1/3 non-rotational bracket. You can put any other director in place of Mr. G in 1/3 non-rotational bracket and rotate your calculations among other 5 directors.

In other words you are free to put anyone in 1/3 non-rotational bracket with Mr. A (being MD). However my idea would be to put someone, who is a promoter director or a director from the promoter’s family, in 1/3 non-rotational bracket with Mr. A.

If there is no promoter director or family director to be paired with Mr. A, simply put anyone according to your wish out of remaining 6 directors.

Regards

Situation 1.

Let us assume A, B, C, D, E, F, G are the directors. If we take 7 directors (with no MD) then what will be the calculation of directors retiring by rotation as per section 256 in year 2012, 2013, 2014 and 2015 considering retiring directors are appointed in the corresponding AGM in which they are retiring and  A is longest in office followed by B, C, D, E, F, G.?

Situation 2.

If we take 7 directors (with 1 MD) then the calculation of directors retiring by rotation as per section 256 will be 2. Right. Let us assume A, B, C, D, E, F, G are the directors and A is the MD and B is longest in office followed by C, D, E, F, G. Pls elaborate which directors will retire in the year AGM held in year 2012, 2013, 2014 and 2015 considering retiring directors are appointed in the corresponding AGM in which they are retiring.

Thanks and Regards

Guys plz don't forget that retiring directors can be reappointed also subject to some of the exeptions.....

Situation 1.

Let us assume A, B, C, D, E, F, G are the directors. If we take 7 directors (with no MD) then what will be the calculation of directors retiring by rotation as per section 256 in year 2012, 2013, 2014 and 2015 considering retiring directors are appointed in the corresponding AGM in which they are retiring and  A is longest in office followed by B, C, D, E, F, G.?

Thank you very much.  

Let me admit here, I am so fond of your explanations and approach which always put forward a learning soul in me on front plateform to learn from you so that there is no room for ambiguity. I really cherish to interact with you with my silly doubts which now and then prop up in my intellect so that they are ALL CLEAR. (Coz I am cent percent certain you are there always... )

Two more small queries Ankur Jee.  

In situation no. 1. Why we are putting all the 7 director in rotational category. Can we treat any 2 directors as per our wish (like B and D) in non-rotational category.

If answer to my query is affirmative then in my case calculation will be :

Pls tell me once I have treated 2 directors i.e. B and D in non-rotational category, they will remain always in this category throughout their appointment or I can change it in some exceptional circumstances. Also what is the effect of appointment of more directors or resignation in the board of this company on the status of non rotational directors.

With Regards,

Neha

Hahaha…I have a super idiot mistake in Situation:1 ….yup calculation will rotate with 5 directors like in situation:2 and as depicted by you. In fact it was a copy paste mistake as one year back I used a dummy situation with 7 rotational director to explain the picture to one of my trainee associate….anyways thanks for correcting me…lolz.

Yes….you can put B and D in rotational category as there is no legal hassles. However you have to be careful enough while mixing them with existing directors as far as the issue of longest in office is concerned.

New appointment and resignation: At every appointment and resignation prepare a fresh calculation sheet and sequence of directors like A, B, C, D and so on….and calculate accordingly. If you feel any problem at the time of appointment and resignation let me know….i’ll try to do it for you…

Thanks anyways for all the kind words…one more thing keeping your generous nature and urge for genuine discussions I used to put straight comment on your replies like it is wrong or incorrect. So excise me if your find it weird…I didn’t mean to disrespect anyones knowledge…I truly understand the range of few CCI members and you are one of them…

Take care…

Originally posted by : Ankur Garg
	So excise me if you find it weird…I didn’t mean to disrespect anyones knowledge…I truly understand the range of few CCI members and you are one of them…

Dear Ankur Jee,

There is no room for formalities and excuses in between us. I always understand, respect and appreciate intentions behind your replies. I know they are not weird or to abuse or make anyone inferior knowledgewise.

With Regards.

Ankur ji,

We all know your knowledge sharing attitude and appreciate as well... Thank you a lott.....

Originally posted by : Ankur Garg
	Originally posted by : Khushboo Maheshwari If a company is having 7 directors n one of them is MD and he is not liable to retire by rotation....how many directors will retire by rotation in one AGM...two or one??   Hi,   Please find below the reply.   In your case the total strength of the board is 7 which includes 1 non rotational director i.e. your MD. For the purpose of section-255 total strength of the board would be 7.   Determination of rotational directors u/s 255   Rotational directors in your case would be 2/3 of 7 i.e. 4.67 directors. Here as per section 255 rotational directors would be 5. Remaining 2 will be considered as non- rotational directors and includes your MD.   4.67 will be converted into 5 because of phrase “not less than 2/3” used in section 255.   Determination of Directors liable to retire u/s 256   As per section 256 ---1/3 of rotational directors shall retire at each AGM. Hence 1/3 of 5 would be 1.67.   As per the language of 256 “nearest to 1/3” we can rounded off 1.67 as 2. (As nearest to 1.67 will be 2).   Now in your AGM you have to retire only 2 directors as rotational director.   I hope the calculation method is clear.   Regards Ankur Garg

First of all thank you so much for your reply :-)

There is another small query related to the same topic. Its another public limited company with directors composition as following:

1 - Managing Director (not liable to retire)

2 - Additional Directors

7 - Other Directors

Total 10 Directors

Now how many directors will retire? As per my understanding additional directors won't be counted for the purpose of sec 255. So of 8, 5.33 directors or say 5 will be liable to retire and remaining 3 will not be liable (which includes MD). Of 5, 1/3 will be liable to retire by rotation i.e. 2 Directors

Am I right ?

Dear Khushboo,

Section-255
 

Rotational directors = 2/3 of 10 i.e. 7 directors (round off). Remaining 3 will be considered as non- rotational directors. 

 
Directors liable to retire u/s 256

 

1/3 of 7 would be 3 (rounded off) 

 

Dear Neha,

Your calculation for Khushboo is partly incorrect. Your calculation u/s 255 is absolutely correct i.e. 7 directors. However we need to discuss calculation under 256.

Determination of Directors liable to retire u/s 256

As per the language of 256 and “nearest to 1/3” rule dircetors under sec. 256 will be 7/3 == 2.33 which we can rounded off as 2. (As nearest to 2.33 will be 2).

It is not a general rounded off. So the directors to be retire at the AGM will be 2.

Thanks

Originally posted by : Ankur Garg
	Dear Neha, Your calculation for Khushboo is partly incorrect. Your calculation u/s 255 is absolutely correct i.e. 7 directors. However we need to discuss calculation under 256.   Determination of Directors liable to retire u/s 256   As per the language of 256 and “nearest to 1/3” rule dircetors under sec. 256 will be 7/3 == 2.33 which we can rounded off as 2. (As nearest to 2.33 will be 2).   It is not a general rounded off. So the directors to be retire at the AGM will be 2.   Thanks

@ Neha n Ankur

Do we count additional directors in determining the number of directors as per sec 255 n 256? Please clarify with some provision as "additional directors shall hold office only up to the date of the next annual general meeting of the company" and if they hold office only UPTO the date, is it okay to count them for retiring directors?
 

Hi Khusboo,

Its true that additional directors shall hold office only up to the date of the next annual general meeting of the company. It simply means their tenure is till AGM but they are eligible for  re-appointment at the AGM hence they are counted for calculating retiring directors.

Lets understand it this way for an easy interpretation.

Suppose a public company has all the 3 directors which are additional director. Then if additional director  are not counted in determining the number of directors as per sec 255 n 256 then no one will retire in the AGM.

Thanks and Regards.