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Sec255 & 256 of directors

sivaram (Asst Mgr-Taxation) (6918 Points)

04 January 2012

Dear All,

I am not in a position to Understand sec 255 and Sec256 read together and cnt solve any practical problems can any one explain in detail with an example so that I can understand

Thanks in advance

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10 Replies

CMA Sameer Epari (CA Final Student) (409 Points)
Replied 04 January 2012

DEAR MR.SIVARAM,

WHILE POSTING ANY QUISTION PLEASE MENTION DOUBTS FULLY SUCH AS ACTS...

PLEASE DO NOT MISTATKE ME.

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sivaram (Asst Mgr-Taxation) (6918 Points)
Replied 04 January 2012

Mr Sameer I have given in the heading any way it is of Directors in Company law

Rakesh Dhanuka (Company Secretary) (478 Points)
Replied 04 January 2012

Section 255

Suppose there are 6 directors in a company then atleast 2/3rd of total directors (means 4 directors in our case) should be such who are liable to retire by rotation means in the resolution for their appointment it should be clearly mention that Mr. A is appointed as director liable to retire by rotation and remaining two directors can be MD, WTD who are not liable to retire by rotation and can be on board continously say for a period of 3 years or 5 years.

Section 256

Now referring to our above example, 1/3rd ( 2 directors) of such directors ( means 4 directors who are liable to retire by rotation) shall retire at every annual general meeting who been longest in the office. They will be get retire and will be re-appointment.

Hope these help you to understand these sections

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sivaram (Asst Mgr-Taxation) (6918 Points)
Replied 05 January 2012

Mr Rakesh Dhanuka

I still cant understand my queries are as follows

Will MD and WTD be included in total directors .if so why first we calculate 2/3rd of total directors then apply 1/3rd on total directors instead we can straight apply 1/3rd on total directors and say 2 directors are liable to retire at annual general meeting

why we calcuulate directors laible to rotation first and then say of 2 directors are laible to rtire who have longest tenure of office

can u be liitle eloborate to explain me

what happens if total number of directors are of odd number and applying 2/3rd and 1/3rd come in fractions ?

Rakesh Dhanuka (Company Secretary) (478 Points)
Replied 05 January 2012

Yes, MD and WTD will be included in the total number of directors. section 255 says that constitution of the Board should be such that office of 2/3rd of the total directors should be liable to determine by retirement of directors by rotation. Section 256 says 1/3rd of such directors means the directors who are to retire by rotation should be retired at every AGM. If the number of directors on board is odd say 7 directors, one is MD and another WTD and remaining 5 directors are liable to retire by rotation. Out of these 5 directors, 3 directors (fractions is to be rounded off to next number) will retire at every AGM rotationally.

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sivaram (Asst Mgr-Taxation) (6918 Points)
Replied 05 January 2012

Mr Rakesh Dhanuka

Correct me if i am wrong u said out of 7 directors 2 are excluded namely MD AND WTD

now out of 5 apply 2/3 as per sec 255it comes to 3.33 so it is taken as 4 who are liable to retire by rotation

now apply 256 1/3 of 2/3 ie 1/3 of 4 is 1.33

so as per sec 256 it is treated as 1

so one director will retire at the AGM and will be reappointed once again

awaiting for ur reply eagerly

Rakesh Dhanuka (Company Secretary) (478 Points)
Replied 05 January 2012

Sir ji, 2/3rd is to be calculated on total strength of the directors means 2/3rd of 7 directors in our case. 1/3rd is to be calculated on 5 directors (2/3rd of 7 directors). Fractions is to be rounded off to next number.

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