Vacation of office u/s 167 (b)

[Vivek Hegde]

Dear Friends,

As per Section 167 (b), if a Director 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, he shall vacate office. 

I have the following queries:

1. How to calculate the period of 12 months? Is it calendar year or financial year or 12 months from the date he last attended the board meeting? 

2. I have a scenario. The Board sits in US. Only to meet resident director criteria, they have appointed one resident director. Foreign directors will never travel to India and resident director will be India always. All Board meetings will be held abroad. We are following a practice of vacation of office every year. In the same meeting where he vacates his office u/s 167 (b), we will again appoint hims as director and next year also we will do the same thing. We will file Form DIR-12 for vacation as well as new appointment. 

Is there any provision restricting the above practice?

Kindly share your thoughts.

Warm Regards

CS Vivek Hegde, FCS, CMA

Vivek Hegde & Co.
Company Secretaries
No.86, 1st Floor, 2nd Main
Samvruddhi Enclave

Kumaraswamy Layout 2nd Stage 

Bangalore-560061
Mob : 09900898223

Off: 080 26663577

[K S R K PRADEEP KUMAR]

Hi Vivek,

You can conveine the BM through Video Conference and consider their presence right. 

Pradeep

[gopal sharma]

its calander year from jan to march.

we have another option, you can conduct 1 BM through Video conferencing.

[K S R K PRADEEP KUMAR]

As per FAQs issued by ICSI :

• When a foreign director joins the meeting by audio/video conference, (where he 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? 
• Ans.The requirement of section 167(1)(b) is only for attendance of a Director in the Board Meeting himself; however this section doesn‘t deal or regulate the manner of attending the Board Meeting. Therefore, the Board Meeting attended by any Director, whether in person or through video conferencing or other audio visual means, shall be sufficient attendance for the purpose of section 167(1)(b).  
• Please clarify whether vacation of office of director on account of not attending board meetings under Section 167(1)(b) has prospective or retrospective effect? 
• ANS: The said section is applicable from 1st April 2014, it means that a director absent himself from the entire board meeting held during a period of twelve months with or without obtaining leave of absence, his office as director shall vacate. 
  

Pradeep

[mgra...@gmail.com]

1. In my opinion, year means financial year. 

2. Attending the meeting on voice call or video should be OK to make the Indian director present at the meeting.(sec 173(2)

gopalrathnam