Alternate Director

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Reg: Alternate director and original director Sec 161 (2) - For information of all CS.

1.     Alternate director may be appointed when a director is away from India for period of not less than three months.

2.     The Board has power to appoint alternate director as per AoA. In the absence of provision in AoA members may appoint Alternate director

3.     Alternate director will represent in the Board during in the absence of original Director

4.     An alternate director shall not hold office for a period longer than that permissible to the director in whose place he has been appointed and shall vacate the office if and when the director in whose place he has been appointed returns to India

 

Point to be noted are:

1.     Under Section 167 (1) (b), a director ceases to be a director if he absents himself from all the meetings of the Board of Directors held during a period of twelve months with or without seeking leave of absence of the Board;

2.     If Mr. A ( Alternate) & Mr. O ( original) absents themselves from attending all the meetings of the Board of Directors held during a period of twelve months with or without seeking leave of absence, both of them ceases to be director.

3.     Participation of the directors by video conferencing or by other audio visual means  is counted for the purposes of quorum under section 174. It is not clear whether participation by audio / video conference is sufficient to avoid vacation u/s 167 (1) (b).

4.     If Mr.O attends the Board meeting ( either personally or by video conference) Mr A will cease to be a director.    Again the company has to appoint Mr A as alternate director in the subsequent Board meeting.

 

Following Clarification was sought from MCA on Alternate Director and vacation of office.

Under Section 167 (1) (b), a director ceases to be a director if he absents himself from all the meetings of the Board of Directors held during a period of twelve months with or without seeking leave of absence of the Board;

Clarification sought from MCA are:

a.     If an alternate director attends a meeting in a period of 12 months, does his attendance is sufficient u/s 167 (1)(b) for original director?  Can the original director (foreign director) not come to India to attend any meeting and still continue as director? 

b.     When a foreign director joins the meeting by audio/video conference, (which is counted for the purpose of quorum u/s 174)- Is it sufficient to say that foreign director was not absent u/s 167(1) (b) even if he does not physically attend even a single Board meeting in a period of 12 months? 

c.     If yes, whether alternate director vacates office when the original directors joins video conference at a Board meeting.