First directors, Corporate Laws / SEBI / LLP

[Yeshwanth u]

Dear All,

PFB, my query on appointment of first directors.

Section 254.

In default of and subject to any regulations in the articles of the company, subscribers of memorandum who are individuals, shall be deemded to be the directors of the company, untill the directors' are duly appointed in a accordance with section 255.

Section 255.

(1) unless the articles provide for the retirement of all directors at every AGM, not less than 2/3rd of the total number of directors of the public company,or of a private company which is a subsidiary of a public company, shall-

       (a) be person whose period of office is liable to determination by retirement of directors by rotation; and

       (b) Save as otherwise expressly provided in this act,be appointed by the company in general meeting.

My query,

Public company appointing its first director through articles (sec 254), can it classify the director/s as rotational director/s in articles.

If yes, sec 255 tells rotational directors shall be appointed in general meeting. Therefore articles can't clasify the director/s as rotational director. 

If no, sec 255 mandates to classify atleast 2/3rd of total number directors as rotational director. Therefore sec 255 is not complied. 

 

Regards

Yeshwanth.U

 

Posts / Replies

[ROHAN THAKKAR]

Dear Sir,

1. Whenever a company is incorporated, there should be some persons who should manage the company after incorporation. Generally First directors will be specified in the Articles of Association (AOA). If the name of the persons are specified in the AOA, then they will act as first directors. If the name of first directors are not stated in AOA, then and then only, subscribers of memorandum who are individuals, shall be deemded to be the directors of the company. The first directors are not appointed by members in the general meeting. consequently, they will not retire but vacate their office when the regular directors are appointed. Regular directors are to be appointed before first AGM.
2. Though it is not expressly written anywhere, but the regular directors will be appointed in a statutory general meeting. It is to be noted that every public company is required to hold a statutory general meeting. If not appointed in a statutory general meeting, then Extra Ordinary General Meeting before AGM will have to be called for appointment of regular directors.
3. Whenever regular directors are appointed, then specification is required to be made as to who will be rotational and who will be non-rotational director. At such point of time, Section 255. needs to be complied with.

Hope, the above points would have made clear the issue.

Regards,

Rohan Thakkar

9228720536

[RAJAGOPALAN BALACHANDRAN]

 

First  directors  are generaly named in the Articles. Otherwise the subscribers to the memorandum who are individuals shall be deemed  to be  directors  of the company

The above directors shall hold office till  the conclusion of the next  general meeting

In the general meeting  appointment  of directors are made. At two-thirds of  the  directors appointed are liable to retire by rotation in the next or  subsequent  Annual General Meetings