Corporate and Allied Laws – CA Final Nov’16

Q1. The maximum number of Director of Time Trading Private Limited is 9. The Board of Directors of the company proposes to increase the number of Directors to 15. Advice.

Ans. Section 149 (1) the maximum number of directors is 15. Company may appoint more than 15 directors by passing a special resolution. Further, alteration in articles of association is also required for such increased number.

Q2. Hindustan Zink limited (a Government company) wants to raise the number of directors from 12 to 18. Comment.

Ans. Section 149(1) the limit of maximum of 15 directors and their increase in limit by special resolution shall not apply to Government Company. MCA has clarified vide notification GSR 463(E).

Q3. What is the minimum number of directors in a company as per Companies Act 2013?

Ans. The minimum number of Directors in a company as per Section 149 is:
 Public Company 3
 Private Company 2
 One Person Company 1

Q4. Who are independent director and how many independent directors are required in a company.

Ans. An independent director means a director other than a managing director or a whole-time director or a nominee director. Every listed public company shall have at least one-third of the total number of directors as independent directors. Central Government may provide for such minimum number in case of class of public company.

Q5. In case two directors were appointed on the same day, how would you decide their retirement by rotation?

Ans. The directors who will retire by rotation shall be those who have been in office for the longest term since their appointment. In case of two or more directors who were appointed on the same date at the same AGM, the retiring directors will be mutually agreed by them or in the absence of such agreement, will be determined by lots.

Q6. The Board of Directors of FCA Limited appointed Mr. Vid as an alternate director for a period of two months against a director who has proceeded abroad on leave for a period of six months. Articles of Association of the company are silent. Check validity of appointment.

Ans. Articles authorise or by resolution in general meeting Board of Directors may appoint an alternate director for a director who has proceeded abroad for a period not less than three month. Since article is silent and no resolution is taken in general meeting therefore appointment is not valid.

Q7. Mr. Ramy is appointed as an alternate director for an independent director in the company; however he is not qualified to be an independent director. Is this a valid appointment?

Ans. If a person is not qualified to be an independent director, he cannot be appointed as an alternate director for an independent director. However he may be appointed as an alternate director for a director not being an independent director.

Q8. A company is appointing Mr. B as a director. Mr. B is a director of another company which has failed to repay its deposits. Whether Mr. B can be appointed as a director of the new company?

Ans. A company has failed to repay its deposits on the due date and such failure continues for a year or more, then director of such company cannot be appointed as director of other company for five years from the date company failed to repay.

Q9. XYZ Company Ltd. in its annual general meeting appointed all its directors by passing one single resolution. No objection was made to the resolution. Please comment on the validity.

Ans. A proposal must be moved and agreed to without any vote being cast against it, proposing a motion to appoint two or more directors by a single resolution at general meeting. Even if no objection is made then also resolution passed in contravention of the aforesaid statement shall be void.

Q10. Board filled up a casual vacancy caused by death of Mr. K by appointing Mr. L as a director on 3rd April 2016. Mr. L expired on 12th May 2016 after working as director. The board wishes to appoint Mrs. L to fill casual vacancy. Please advise the board.

Ans. Vacancy arising on the Board due to vacation of office by the director appointed to fill a casual vacancy in the first place, does not create another casual vacancy as section 161 (4) clearly mentions that such vacancy is created by the vacation of office by any director appointed by the company in general meeting. Hence, the Board cannot fill in the vacancy arising from the death of Mr. L.