1. Appointment of Additional Director in a Company

 

Section 161(1) of the Companies Act, 2013 (CA 2013) provides for the appointment of additional director in a company. This section came into force with effect from 12th September, 2013 vide Notification No. S.O. 2754(E) dated 12-09-2013. Section 161(1) of the CA 2013 corresponds to section 260 of the Companies Act, 1956 i.e. additional director. The power to appoint additional director may be conferred to the Board of Director (BOD) by the articles of the company.

 

2. Eligible Person for Additional Director

 

The BOD may appoint any person as an additional director of the company. However, if any person fails to get appointed as a director in a general meeting shall also not be eligible for appointment as an additional directors of a company. Note that this eligibility criterion was not there in the provisions of the Companies Act, 1956.

 

3. Term of Office of Additional Director

 

The appointed additional director shall hold office up to the date of the next Annual General Meeting (AGM) or the last date on which the AGM should have been held, whichever is earlier. Under the Companies Act, 1956 the additional directors shall hold office only up to the date of the next AGM of the Company.

 

4. Appointment of Alternate Director in a Company

 

The appointment of alternate directors of company shall be made as per section 161(2) of the Companies Act, 2013. This section came into force on 1st April, 2014 vide Notification No. S.O. 902(E) issued dated 27-03-2014. Section 161(2) of the CA 2013 corresponds to the section 313 of the Companies Act, 1956 i.e. appointment and term of office of alternate directors.

 

5. Power to Appoint Alternate Director

 

For the appointment of an alternate director, the Board of Directors (BOD) may be authorized by:

 

1. Articles of the Company; or

 

2. A resolution passed in the General Meetings of the company.

 

Therefore, the BOD may appoint any person to act as an alternate director, if so authorized by its articles or by a resolution passed by the company in general meeting.

 

6. When to Appoint Alternate Director?

 

Whenever, a director of the company is absence for a period of at least 3 months from India, an alternate director may be appointed in his place by the BOD of the company.

 

Under the Companies Act, 1956, it was provided that alternate director can be appointed in place of director who is absent from the state in which meetings of the Board are ordinarily held. Whereas, the provisions of new CA, 2013 provide that an alternate director can only be appointed in case a director leaves India for not less than three months.

 

7. Eligible Person for Alternate Director

 

The BOD may appoint a person to act as alternate director for a director during his/her absence from India. However, if a person already holding any alternate directorship for any other director in the company then, he shall not be eligible for appointment as an alternate director of any other director of the same company.

 

Hence, it is quite clear that a person shall not be appointed as an alternate director for two or more directors in the same company. Further, if a person is qualified to be appointed as an independent director then only he shall be eligible for appointment as an alternate director for an independent director of a company. That means no person shall be appointed as an alternate director for an independent director unless he is qualified to be appointed as an independent director under the provisions of the CA, 2013.

 

8. Term of Office of Alternate Director

 

The appointed alternate director shall not hold office for a period longer than that permissible to the director in whose place he has been appointed. Further, the alternate director shall vacate the office if and when the original director returns to India.

 

Note that if the term of office of the original director is determined before he so returns to India, any provision for the automatic re-appointment of retiring directors in default of another appointment shall apply to the original, and not to the alternate director.

 

9. Appointment of Nominee Director in a Company

 

The provisions of Section 161(3) of the Companies Act, 2013 deals with the provisions related to the appointment of nominee director of a company. Sub-section (3) of Section 161 of the CA, 2013 came into force on 12th September, 2013 vide Notification No. S.O. 2754(E) dated 12-09-2013.

 

10. Casual Vacancy of Director in a Public Company

 

Section 161(4) of the Companies Act, 2013 deals with the provisions related to the casual vacancy of directors in a public company. This section came into force on 12th September, 2013 vide Notification No. S.O. 2754(E) dated 12-09-2013. Section 161(4) of CA, 2013 corresponds to the section 262 of the Companies Act, 1956 i.e. filling of casual vacancies among directors.

 

In compliance with the provisions of section 161(4) of the CA 2013, if the office of a public company director appointed in GM is vacated before his term of office expires in the normal course, then such casual vacancy shall be filled by the BOD in BM of the company. Under the old Companies Act, 1956, the provisions for such casual vacancy was applicable to public company or a private company which is a subsidiary of a public company. However, under the new Companies Act, 2013, it has been provided that the provision related to the casual vacancy is applicable to only public company.

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