poonam verma (Company Secretary) (191 Points)
07 April 2011Dear Friends,
I have 4 directors in my unlisted public company. Out of 4 directors 1 is MD and 1 is the WTD. according to my articles MD and WTD are the non-rotational directors. Then how can i comply with the provisions of section 255. What will be the number of rotational directors in my company. Do i need to appoint more directors for compliance of provisions of section 255 & 256 of companies act and what is penalty for non-compliance.
Kindly advice.
Thanks in advance
CS Poonam
Shridhi Jain
(Company Secretary)
(1678 Points)
Replied 07 April 2011
I think, you need to show the retirement of one director (who is not MD and WTD).
One third of the total number of directors are liable to retire by rotation.
In your case, one third of four will be ONE.
So u need to show the retirement of One director only.
Expert views needed.
Abhinash Pansari
(CA final Article)
(101 Points)
Replied 07 April 2011
In my opinion 1 director should be retired because as per CA 1/3rd of the toatal must be retired unless contrary provided in AOA. Here 2 x 1/3 = .66 i.e 1 director.
Hence you are not bound to appoint more director.
Again, Dont bother for penalty as you are as per law
Syam kamal
(Company Secretary)
(156 Points)
Replied 07 April 2011
Dear Poonam
The composition of Board in not in accordance with Section 255 of the Companies Act, 1956 which requires at least two-third should be directors liable to retire by rotation. So in your case at least three rotational directors should be there instead of present two. As you rightly pointed out in your question you have to induct one more rotational director and two directors (1/3rd of 5) shall retire each year thereafter.
Section 255 doesn’t says anything about penalty for non compliance. Hence penalty provided under Section 629A is applicable
poonam verma
(Company Secretary)
(191 Points)
Replied 07 April 2011
| Originally posted by : Syam kamal | ||
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Dear Poonam The composition of Board in not in accordance with Section 255 of the Companies Act, 1956 which requires at least two-third should be directors liable to retire by rotation. So in your case at least three rotational directors should be there instead of present two. As you rightly pointed out in your question you have to induct one more rotational director and two directors (1/3rd of 5) shall retire each year thereafter. Section 255 doesn’t says anything about penalty for non compliance. Hence penalty provided under Section 629A is applicable |
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thank u all. i think i need to induct one more director and keep 3 rotational directors and 2 MD/WTD. but then 2/3 of 5= 3 will be rotational and at each agm 1/3 of 3 i.e. 1 will retire. but then how can we say that by having only 3 directors in a public ltd. comany we can run it, if we are not able to comply with other provisions of company law by having minimum no. of directors in the board
Syam kamal
(Company Secretary)
(156 Points)
Replied 07 April 2011
"But then how can we say that by having only 3 directors in a public ltd. comany we can run it, if we are not able to comply with other provisions of company law by having minimum no. of directors in the board" Not clear..... ???
CS Ankur Srivastava
(Company Secretary & Compliance Officer)
(17853 Points)
Replied 07 April 2011
| Originally posted by : Syam kamal | ||
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Dear Poonam The composition of Board in not in accordance with Section 255 of the Companies Act, 1956 which requires at least two-third should be directors liable to retire by rotation. So in your case at least three rotational directors should be there instead of present two. As you rightly pointed out in your question you have to induct one more rotational director and two directors (1/3rd of 5) shall retire each year thereafter. Section 255 doesn’t says anything about penalty for non compliance. Hence penalty provided under Section 629A is applicable |
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I am completely agree with teh view of Mr. Shyam Kamal, Section 255 required that the Company must have atleast 2/3 Rotational Director.
The company has to induct 1 or more director to comply with sectino 255.
CS Abhishek Pathak
(PCS)
(41 Points)
Replied 07 April 2011
I also agree with Mr. Syam kamal. Requirements of sec- 255 and sec-256 will be full filled only by having 1 more director.
Santhosh Poojary
(SIEMPRE AHÍ PARA TI)
(15607 Points)
Replied 07 April 2011
| Originally posted by : Shridhi Jain | ||
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I think, you need to show the retirement of one director (who is not MD and WTD). One third of the total number of directors are liable to retire by rotation. In your case, one third of four will be ONE. So u need to show the retirement of One director only. Expert views needed. |
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CA Sandeep Kumar
(Audit Assistant)
(804 Points)
Replied 08 April 2011
| Originally posted by : CS Ankur Srivastava | ||
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Originally posted by : Syam kamal Dear Poonam The composition of Board in not in accordance with Section 255 of the Companies Act, 1956 which requires at least two-third should be directors liable to retire by rotation. So in your case at least three rotational directors should be there instead of present two. As you rightly pointed out in your question you have to induct one more rotational director and two directors (1/3rd of 5) shall retire each year thereafter. Section 255 doesn’t says anything about penalty for non compliance. Hence penalty provided under Section 629A is applicable I am completely agree with teh view of Mr. Shyam Kamal, Section 255 required that the Company must have atleast 2/3 Rotational Director. The company has to induct 1 or more director to comply with sectino 255. |
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Naresh Kumar
(student)
(51 Points)
Replied 08 April 2011
Dear Poonam,
Section 255 says that not at least 2/3 of the board of directors shall be liable to retire by rotation. it means not more than 1/3 of the board of directors shall not be non rotational. you have to do one thing either make the WTD to retire by rotation or appoint one additional director.
requesting other expert to correct me if i m wrong,
Syam kamal
(Company Secretary)
(156 Points)
Replied 08 April 2011
| Originally posted by : Naresh Kumar | ||
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Dear Poonam, Section 255 says that not at least 2/3 of the board of directors shall be liable to retire by rotation. it means not more than 1/3 of the board of directors shall not be non rotational. you have to do one thing either make the WTD to retire by rotation or appoint one additional director. requesting other expert to correct me if i m wrong, |
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Dear Naresh
Can u specify the difference between two
Secondly what if the WTD refuses to retire by rotation because the articles provides him the privilege not to retire by rotation.
Naresh Kumar
(student)
(51 Points)
Replied 08 April 2011
Dear sir,
i mean to say not more than 1/3 of the board of director shall be non rotational.
please tell me how can v make him liable to retire by rotation. By alter the AOA?
CAclubindia
