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Validity of Board meeting and Director

Pradish (training) (49 Points)

08 June 2010

Dear All
ABC Pvt.Ltd. appointed Mr X as alternate Director in place of Mr Y who reside in Italy. Three of company director on there visit to italy held a meeting there and finalised two business, will this meeting held outside India valid, if yes should Mr Y counted for quorum, validity of Director Mr X after this meeting ,Usual place where the board meeting is held is in Delhi.

Thnx

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3 Replies

Ankur Garg (Company Secretary and Compliance Officer) (114773 Points)
Replied 08 June 2010

Brief note on Appointment of an alternate director

Provisions related to appointment of Alternate Director are governed by Section 313 of the Companies Act, 1956.

The Board may appoint an alternate director only if this is authorised by the Articles. The alternate director will act as a director for a director (original director) during his absence for at least three months from the state in which Board meetings are ordinarily held. This appointment may be made at a meeting of the Board or by a circular resolution. The Articles of a private company may provide for the appointment of an alternate director.

The original director and the alternate director can remain on the Board so long as the above position continues and there is no need of approval by the company in general meeting. But whenever the "original" director returns to the state in question, the alternate director automatically vacates his office and he may be appointed again when the original director leaves that state. The return of the original director to the state will be enough for the cessation of office of the alternate director whether or not the original director attends a Board meeting. E-Form 32 shall be filed electronically with the Registrar in respect of vacation of office and appointment on every occasion.

Although either the original director or the alternate director can act at a given time, it appears that an alternate director can be appointed only where the maximum strength of the Board permits such addition to the Board.

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Ankur Garg (Company Secretary and Compliance Officer) (114773 Points)
Replied 08 June 2010

Hi,

As per my understanding board meeting held in Italy is valid subject to the compliance of other provisions of companies act. 1956 like quorum (section 287) and notice (section 286).

Keeping in view the above brief note on alternate director Mr. Y should not be counted for the purpose of Board meeting as Mr. X is the correct person to attend the Board meeting in Italy.

Mr. Y may joins his position as a director if as an "original" director he returns to the state in which Board meetings are ordinarily held.

You are requested to wait for other opinions.

Thanks

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