Section 161 of Companies Act 2013

Section 161 of Companies Act 2013

May 03, 2016
     
Section-161-of-companies-act-2013

Section 161 of Companies Act, 2013


Section Description : Appointment of Additional Director, Alternate Director and Nominee Director
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Provision of Section 161 (1)  : “The articles of a company may confer on its Board of Directors the power to appoint any person, other than a person who fails to get appointed as a director in a general meeting, as an additional director at any time who shall hold office up to the date of the next annual general meeting or the last date on which the annual general meeting should have been held, whichever is earlier.”

Important Points :
i.      A company may appoint Additional Director, its articles confer such power on Board of Directors.
ii.    An additional director shall hold office up to the date of the next AGM or the last date on which the AGM should have been held, whichever is earlier

Provision of Section 161 (2) : “The Board of Directors of a company may, if so authorised by its articles or by a resolution passed by the company in general meeting, appoint a person, not being a person holding any alternate directorship for any other director in the company, to act as an alternate director for a director during his absence for a period of not less than three months from India:

Provided that 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 this Act:

Provided further that an alternate director shall not hold office for a period longer than that permissible to the director in whose place he has been appointed and shall vacate the office if and when the director in whose place he has been appointed returns to India:

Provided also 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.”

Important Points :
i.        A company may appoint Alternate Director, if its articles authorise to do so or board is authorised by the shareholders through resolution.
ii.         In place of director who is outside India for a period of not less than three months.
iii.     Such alternate director shall vacate his office if and when original director returns to India.
  
Provision of Section 161 (3) : “Subject to the articles of a company, the Board may appoint any person as a director nominated by any institution in pursuance of the provisions of any law for the time being in force or of any agreement or by the Central Government or the State Government by virtue of its shareholding in a Government company.”

Important Points :
If the articles of a company authorize, the board may appoint a person as a nominee director, who is nominated by a nominating agency having right as per the provisions of articles of the company.

Provision of Section 161 (4)  : “In the case of a public company, if the office of any director appointed by the company in general meeting is vacated before his term of office expires in the normal course, the resulting casual vacancy may, in default of and subject to any regulations in the articles of the company, be filled by the Board of Directors at a meeting of the Board:

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