Vacation of Office and Removal of Directors

Vacation of Office and Removal of Directors

Vacation of Office of Director (Sec.167)

The office of a Director shall become vacant if he acquires any disqualification under Sec. 164 namely,

• he fails to obtain the share qualification as per the Articles of the Company

• he is adjudged to be of unsound mind• he applies to be or has been adjudged an insolvent• he is convicted by a court for moral turpitude or

otherwise and sentenced with imprisonment for not less than 6 months and a period of five years has not elapsed

• He is convicted of any offence with imprisonment for 7 or more years

contd...

• he absents from all the meetings of the BOD held during a period of 12 months with or without leave of the Board

• he acts in contravention of any provision under Sec.184 relating to disclosure of interest in contracts with the company

• he is disqualified by the order of a court or tribunal• he is removed in pursuance of the provisions of the Act.• he ceases to be in the position of the office in the holding, subsidiary

or associate company by virtue of which he was appointed a director

In case a director functions even after knowing that his office has become vacant due to any of the disqualifications he shall be punishable with imprisonment which may extend to one year or with fine which shall not be less than 1 lakh which may extend to five lakh rupees or both.

Vacation by Resignation of Director

• Sec.168 deals with resignation of Director. A director may resign from his office by giving a notice in writing and the Board shall take note of the same and inform the Registrar. The Board shall lay the fact before the next general meeting.

• The director shall forward a copy of his resignation with reasons of his resignation within 30 days to the Registrar.

• He is liable for the offences during his tenure.• If all the directors resign the promoter or in his absence

the Central Govt. shall appoint required number of directors who will hold office till the directors are appointed in the company in general meeting.

Removal of Director

• A company ( share holders) may by an ordinary resolution remove a director except a director appointed by the Tribunal on the ground of oppression or mismanagement to safeguard the public interest

Meetings and Proceedings

Statutory Meeting

• First meeting of the members of the company after it commences business.

• Held once in the lifetime of the company.• This Meeting is not applicable to a private

company. • The following companies are required to hold the

statutory meeting:– Every public company limited by shares.– Every company limited by guarantee and having a

share capital.

CONTD…

• To be held between 1 to 6 months from the date of commencement of business

• The ‘statutory report’ is to be forwarded 21 days before the meeting.

• The Board of Directors shall forward the report which should include the following:

List of Members Shares allotted and the amount received from

them Particulars of the directors, managers and

secretary Particulars of contracts that have to be approved The detail of company’s affairs along with fees

and brokerage paid.

ANNUAL GENERAL MEETING (AGM)

• Sec. 95 provides: Every company other than a One Person Company shall in each year hold in addition to any other meetings a general meeting as its annual general meeting (AGM) and shall specify the meeting as such in the notices calling it.

• Not more than fifteen months shall elapse between the date of one annual general meeting of a company and that of the next.

• The first AGM of a company shall be held within a period of nine months from the closing of the first financial year and in any other case within a period of six months. This period can be extended by the ROC by 3 months.

Contd..

• Every AGM shall be called during business hours i.e. 9 am to 6 pm, on a day that is not a National Holiday (as declared by the Central Govt), and shall be held either at the registered office of the company or at some other place within the city, town or village in which the registered office of the company is situated. The Central Govt may exempt a company from the above provisions

Contd…

In the case of an AGM, all business to be transacted at the meeting shall be deemed special, with the exception of business relating to – the consideration of the accounts, balance sheet and

the reports of the Board of directors and auditors, – the declaration of a dividend, – the appointment of directors in the place of those

retiring, and – the appointment of and the fixing of the remuneration

of, the auditors

Contd..

• Attached to every balance sheet laid before a company in general meeting, a report by its Board of directors, with respect to –– the state of affairs of the company;– the amounts, if any, which it proposes to carry to any reserves in

such balance sheet ;– the amount, if any, which it recommends should be paid by way

of dividend ;– material changes and commitments, if any, affecting the financial

position of the company• Three copies of balance sheet, etc., to be filed with registrar within

30 days of laying them at the AGM.

Extra Ordinary General Meeting

• Statutory and Annual General Meetings are ordinary meetings

• Any meeting other than these are called EGM for the purpose of transacting some urgent or special business which cannot be postponed till the next AGM

• Board may call on its own : for issue of right share, for increasing the remuneration of MD or Whole-time director.

• On requisition of the members

QUORUM

The minimum number of members of an assembly or society that must be present at any of its meetings to make the proceedings of that meeting valid.

Minimum 5 members to be present for quorum up to 1000. It rise to 15 if more than 1000 and up to 30 if more than 5000 members

Business to be transacted

• Ordinary business:

1. Consideration of accounts, reports of Board of Directors and auditors,

2. Declaration of Dividend

3. Appointment of directors in place of retiring directors

4. Appointing auditors and their remuneration

• Special business: 1. Removal of director 2. Issue of rights/bonus shares 3. Election of a person as a director.

Minutes of the Meetings

• 1.a)Every company shall cause minutes of all proceedings of every general meeting and of all proceedings of every meeting of its Board of directors or of every committee of the Board, to be kept by making within thirty days of the conclusion of every such meeting concerned, entries thereof in books kept for that purpose with their pages consecutively numbered.

• (b) Each page of every such book shall be initialled or signed and the last page of the record of proceedings of each meeting in such books shall be dated and signed

• (c) In no case the minutes of proceedings of a meeting shall be attached to any such book as aforesaid by pasting or otherwise.

• (2) The minutes of each meeting shall contain a fair and correct summary of the proceedings.

• (3) All appointments of officers made at any of the meetings aforesaid shall be included in the minutes of the meeting.

Contd…

(4) In the case of a meeting of the Board of directors or of a committee of the Board, the minutes shall also contain –

(a) the names of the directors present at the meeting ; and

(b) in the case of each resolution passed at the meeting, the names of the directors, if any, dissenting from, or not concurring in, the resolution.

Ordinary Resolution

• Resolution shall be an Ordinary resolution:– At a general meeting the Votes Cast in

Favor of the Resolution ( by members – through their Presence or Proxies ) exceed the votes cast Against the Resolution by members

Special Resolution

• Resolution shall be Special when:– Intention to propose the resolution as a

special resolution will be specified in the notice calling the general meeting

– Notice required under this Act has been duly given of the general meeting

– Votes cast in favor of the resolution are not less than three times the number of the votes cast against the resolution

WINDING UP

Winding up

• 270. (1) The winding up of a company may be either—

(a) by the Tribunal; or (b) voluntary.

By the Tribunal

• Sec. 271: (1) A company may, on a petition under section 272, be wound up by the Tribunal,—

• (a) if the company is unable to pay its debts;• (b) if the company has, by special resolution,

resolved that the company be wound up by the Tribunal;

• (c) if the company has acted against the interests of the sovereignty and integrity of India, the security of the State, friendly relations with foreign States, public order, decency or morality;

Contd…

• (d) if the Tribunal has ordered the winding up of the company under Chapter XIX;

• (e) If the Tribunal is of the opinion that the affairs of the company have been conducted in a fraudulent manner or the company was formed for fraudulent and unlawful purpose or the persons concerned in the formation or management of its affairs have been guilty of fraud, misfeasance or misconduct in connection therewith and that it is proper that the company be wound up;

Contd…

• (f) if the company has made a default in filing with the Registrar its financial statements or annual returns for immediately preceding five consecutive financial years; or

• (g) if the Tribunal is of the opinion that it is just and equitable that the company should be wound up.

Voluntary Winding up

• It means winding up by the members or creditors of a company without interference by the Tribunal

• By passing an ordinary resolution: if the Articles of the company provides

• By passing a special resolution

Appointment of Liquidator

• The co in its general meeting shall appoint one or more liquidators to handle the affairs of itsaffairs and distributing its assets. It shall fix the remuneration of liquidators. The ROC is to be informed

• Ceasing of the Board’s power

• The creditors may go for winding up by holding meeting and appointing liqudator.