directors retiring by rotation

[vinay bl]

Dear Friends,

I am having a doubt regarding directors retiring by rotation. Please let me know, whether the concept of directors retiring by rotation is applicable to Managing Director or not?

Normally Managing Director will be appointed for a term of 5 years.

In the case of a public company or private company which is a subsidiary of public company it is clear from the provisions that one third of the directors retiring by rotation should retire at every Annual General Meeting, that the duration of the office of any director appointed by the company is intended to be not more than three years and by re-appointment only can the holding of the office be extended for further periods. 

                                                             "Notes to Section 256 Ramaiya"

My view is, a Managing Director is basically a Director. I read section 255 and 256 but nowhere it specifically says that directors retiring by rotation is not applicable to a Managing Director. Therefore the concept of directors retiring by rotation is applicable to Managing Director also. 

Am I correct? If not Please correct me, with applicable specific sections, case laws or any provisions.

Thanks and Regards

VINAY B L

[Astarag]

hi

 

yes you are right

nowhere it specifically says that directors retiring by rotation is not applicable to a Managing Director

in some instances Whole time directors are rotated to comply with sec 255 and sec 256.

 

other members views solicited

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with regards,

Cs. P.A. Patnaik
Mob 99480 57660

[BALAJI S]

 

In my view,

 

A Managing Director will usually be from the Non Retiring Directors, since the law states that 1/3 rd of the total number of directors must be directors who must be retiring by rotation

In this case managing director office does not suffer any break if he retires by rotation under section 255 and is re-elected as a director in the same meeting.

 

Regards,

 

Balaji.S

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[Jayashree Chandrasekaran]

You will have to check the company's AOA...generally in most of the articles there will be specific mention that WTD are not subject to retirement by rotation...if nothing is mentioned then they will also be subject to retirement by rotation and if the management wishes you

can amend the articles

Jayashree

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C.JAYASHREE

PARTNER

S.GANESH&ASSOCIATES

CHENNAI

98840 17120

[Sandeep S]

Dear Friends

As a general practice the wholetime directors in a company are appointed for a fixed term and therefore are not made liable to retire by rotation unless the same is to be followed to comply with Sec 255 wherein the company is falling short of the 2/3rds limit. However in such cases,  a clause may be added in the articles or in the initial resolution meant to appoint the person as MD/WTD on the following lines:

 

“A MD / WTD reappointed as a director immediately on retirement by rotation, shall continue to hold his office of managing director or whole time director, and such re-appointment as such director shall not be deemed to constitute a break in this appointment as MD / WTD”

Thanks & regards
CS S Sandeep

Managing Partner

S Sandeep & Associates
Company Secretary
53 (Old No. 27), First Main Road
G1, Sneha Apartments, Ground Floor
1st Main Road, R A Puram
Chennai 600028
Tel: 9884071851
www.sandeep-cs.in

[Suresh Kumar Vaishraj]

Dear Friends,

 

1. The appointment of Managing Direcotor/ Whole time director is done/ ratified by Shareholders at General Meeting and the appointment is done for a specific period and ordinarily it's for 5 years.

 

2. Whereas, if you need to retire any director at an Annual General Meeting, intially you have to take such item of business at the Board Meeting which is held to call for such AGM and such item of business has to be proposed/ approved in such B.M.

 

3. When a mandate of a definite tenure is given by shareholders, how come Board in between can propose for retirement of a M.D./ W.T.D.

 

4. Further the Managing Director/ Whole Time Director could be retired by rotation, if it's facilititated in the resolution passed at the MEETING OF SHAREHOLDERS and also no article of the Articles of Association contravenes such retirement by rotation.

 

Thus I feel unless the elements of point no. 4 above are present, no Managing Director/ Whole Time Director can be retired by rotation.

 

Request other members to give their views.

 

Thanks and Regards,

Suresh Kuamr V.

Company Secretary

Hyderabad

91-9849991201

Suresh Kumar V
Company Secretary
91-9849991201

[vinay bl]

Dear Friends,

Thanks a lot for your valuable input.

Thanks and Regards

VINAY B L

[paritala srinivasarao]

Dear sir   Yes you are right, the concept of retiring by rotation is applicable to the position of managing director also, if the articles provide for the retirement of all directors.     The crux of the matter lies with the articles of association. Many company's articles provide that the managing director need not retire by rotation.   As per section 255, the articles of association of a public company can provide for the retirement of all directors. If the articles is silent or has not provided for the retirement of all directors then at least 2/3 rds of the office of directors shall retire by rotation. The balance 1/3rd directors need not retire by rotation.   Therefore the office of managing director can be brought under the 1/3 rd of the total number of directors and can be made not liable to retire by rotation.     Warm Regards P Srinivasa Rao Company Secretary 9840152398 --- On Mon, 16/8/10, vinay bl <blvi...@gmail.com> wrote:

[Vivek Aggarwal]

Dear Vinay

 

You are right. MD is also liable to retire by rotation as the ACT nowhere prohibits this.

Regards

Vivek Aggarwal

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From: vinay bl <blvi...@gmail.com>
Sent: Mon, 16 August, 2010 1:48:04 PM

Subject: [CSMysore] directors retiring by rotation

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