Ad-Free CAclubindia and Daily Updates on your mobile. Subscribe Now!

sec 257

nirmala mehta (Chartered Accountant) (57 Points)

11 June 2008

*A notice by a person to a company proposing himself as a candidate for the office of director, specifically mentions the name of the director ( who is liable to retire at the ensuing AGM), in whose place he wishes to be appointed. Is such a notice valid? what if such director is not liable to retire at the ensuing AGM. will to amount to removal of director if the comany appoints the person giving the notice in place of the existing director?

*what are the formalities to be carried out by a company and a newly appointed director after his appointment?

Reply
Follow
Share

2 Replies

CA NP Mathi Lingan (Practising Chartered Accountant) (98 Points)
Replied 12 June 2008

Dear Nikita

Sec 257 gives a right to any person other than the retiring director to stand for directorship or a member to propose a candidate for directorship by giving 14 days notice and a deposit of 500Rs.

A retiring director can be re-appointed subject to Sec 256(4)(b).

Sec 256 and 257 are independent sections.

It is not that a director have to retire for inducting another person in the board, appointment can be made even if no directors retire sub to the max limit of 12 prescribed U/s 259.

Sec 257 only gives a right to a person signifying his candidature for the office of director or the intention of a member to propose a candidate for directorship. so a condtional notice that someone have to be appointed in someones place is not enforceable.

Even if the person giving such conditional notice is appointed it will not vacate the office of a director on whose place the notice intented appointment unless expressly it was resolved to remove that director by passing a ordinary resolution as per Sec 284.

Formalities for appointment:

DIN mandatory for appointment.

Get a consent letter from the appointed director.

Get a declaration in Form DD-A that the director is not disqualified from being appointed as a director.

File Form 32 with the MCA.

It is advisable to get a general disclosure from the director in Form 24AA to avoid any violation of Sec 297 in the future.