Friday, January 15, 2010

Article on Additional Director

Section 260 of the Companies Act, 1956 provides appointment of additional director
Articles of Association must contained provision to appoint additional director.Tenure: The Additional director shall hold office upto the date of next Annual General meeting. (First proviso to Section 260 of the Companies Act, 1956)

Appointment of Additional Director by Circular Resolution: The appointment made only by way of Board meeting. However if the articles of the company confer the power to appoint additional director by circular resolution, then resolution can be passed by circular resolution.

MAXIMUM STRENGTH: The additional director as well as existing directors shall not exceed maximum strength of Board of Directors mentioned in the Articles of Association Second proviso to Section 260 of the Companies Act, 1956

APPLICABLITY OF SECTION 257 OF THE COMPANIES ACT, 1956

Section 257 of the Companies Act, 1956 provides that a person who is not a retiring director shall, subject to the provisions of the Act, be eligible for appointment to the office of the director at any Annual General Meeting. First proviso to Section 260 of the Companies Act, 1956 provides that the director shall hold office upto the date of the annual general meeting of the company. Thus he is not retiring director hence the company has to comply section 257 of the Companies Act, 1956.

Nothing in section 255, 258 or 259 shall affect any power conferred on the Board of directors by the articles to appoint additional directors:

255. Appointment of directors and proportion of those who are to retire by rotation

258. Right of company to increase or reduce the number of directors


259. Increase in number of directors to require Government sanction

Admissibility of entries in the books of account

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