Regarding deposit by whole time director during appointment

[kanika sharma]

Dear colleagues,

Greetings of the festive season !!

Please confirm me that at the time of appointment of whole time director he also have to give deposit to the company which would be refundable after appointment like in case of directors appointment as per sec- 160 of new act .

Kindly reply soon , its urgent .

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Thanks & Regards

 

 CS Kanika Sharma

 JJRSIPL

 Gurgaon, haryana

 9711144992

[SrikanthReddyKolli CS]

In which cases Section 160 will apply?

Ans.: As per wordings used in Section 160, it will be applicable in cases of appointment of directors other than retiring directors. Retiring director means a director retiring by rotation at the meeting. Thus it seems to be applicable in following cases:

-          Appointment of additional director as director at AGM

-          Appointment of a director to fill casual vacancy

-          Any other person seeking appointment as director at general meeting (including alternate director, nominee director etc.)

The erstwhile DCA (now MCA) had clarified as under:

“In the view of the Department, additional director appointed under Section 260 and directors appointed to fill casual vacancies under section 262 are not retiring directors within the meaning of the Explanation below sub-section (5) of section 256. Accordingly, in their case, the provisions of section 257(1) will be attracted and will have to be complied with. In view of the clarification given above, the aforesaid directors should comply with the provisions of section 26491) and (2) also.” (Company News & Notes dated July 1, 1963).

 Keeping in view above, MCA could take a view that this Section will apply even to appointment of independent directors under Companies Act 2013. Hence, in practice companies are still following Section 160 in such cases to avoid risk of penal provisions, even though not necessary looking to the intention behind the law.

However, as mentioned above, intention behind this provision is to permit a common person to stand for directorship of a company and at the same time deter frivolous proposals and misuse the provision. 

so, any existing director whose designation is proposed for change to MD or WTD by the board to the shareholders meeting, then the deposit concept does not attract because a person is already director.

others view are welcome

[CS Simranjeet Singh]

agreed with Mr. SrikanthReddyKolli CS  this concept of Section 160 applies only if u r regularising the appointment of additional director or appointing any person directly as an director in GM.

 

 

With Best Regards?

Simranjeet Singh

Associate Company Secretary

"To know, is to know that you know nothing. that is the meaning of true knowledge."

 

   

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[kanika sharma]

Dear sir,

I am thankful to you for your reply and also clear about it but Please clarify that in case of fresh appointment of whole time director by the company under the companies act 2013, which section would apply and in that case whole time director have to deposit money or not ??

Looking forward to hear from you soon ! 

[santhosh kumar]

As per wordings used in Section 160, it will be applicable in cases of appointment of directors other than retiring directors. Retiring director means a director retiring by rotation at the meeting. Thus it seems to be applicable in following cases:

-          Appointment of additional director as director at AGM

-          Appointment of a director to fill casual vacancy

-          Any other person seeking appointment as director at general meeting (including alternate director, nominee director etc.)

CS.M.Santhoshkumar
"From the man who always has a Good heart ! "

ॐ सर्वे भवन्तु सुखिनः

 

 

[kanika sharma]

Thank you.