Appointment of Director proceeds under Companies Act. In accordance with the Companies Act of 2013, every company must have a certain number of directors. The minimum number of directors is fixed according to the different type of companies- a public company must have at least 3 directors, a private company should have 2 and a one person company should have 1 director. The upper limit is fixed at 15. Hence, every company can have a maximum of 15 directors. However, a company needs to pass a specific resolution if it wants to have 15 directors and the inclusion of a woman director also becomes mandatory. Every company that existed on or before the passing of the Companies Act must adhere to the norms of the act maximum within a year. The procedure of Appointment of Director is almost similar or depends on the company.
Appointment of Director to be voted individually- Section 162: The norms of the act apply to all companies irrespective of their sector. These norms, however, are not applicable to the appointments made outside the general meetings of the companies.
The members of the company need to pass a specific resolution for the appointment of director of the company.
But multiple directors can be appointed by a single resolution only if all the members of the company vote unanimously in favor of the decision in the very first meeting itself.
Appointments will be considered void if multiple directors are appointed through a single resolution.
The system of proportional representation
This is given under the section 163 of the Companies Act, 2013. It states that if a director is appointed by the way of proportional representation, he cannot be removed.
This section applies to each and every company.
The norms of the company may instruct for the appointment of a director by proportional representation.
If a company provides for the appointment of directors by proportional representation, it becomes necessary for such a company to appoint a minimum of 2/3rd directors by this system.
Procedure of Appointment of Director
The company may appoint the directors by
- A single transferable vote
- Cumulative voting
- Other ways
The tenure of appointment of a director is for three years. At the end of the period of three years, reappointments must be made and the vacancies of these directors must be filled.
A director’s act cannot be declared void for the reason of his inappropriate appointment, only until it is not known to the company that his appointment is declared void by the companies act, 2013.
However, once it comes to the notice of the company that the appointment of a director is not legitimate, all his actions will hold nil value.