2 years ago (2016-10-15 13:07:54)

Appointment of an Alternate Director

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Text of the provision of Section 161(2) of Companies Act, 2013: The Board of Directors of a company may, if so authorized by its articles or by a resolution passed by the company in general meeting, appoint a person, not being a person holding any alternate directorship for any other director in the company, to act as an alternate director for a director during his absence for a period of not less than 3 months from India.

Provided that no person shall be appointed as an alternate director for an independent director unless he is qualified to be appointed as an independent director under the provisions of this Act:

Provided further that 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:

Provided also that if the term of office of the original director is determined before he so returns to India, any provision for the automatic re-appointment of retiring directors in default of another appointment shall apply to the original, and not to the alternate director.

Key Considerations:

  • Board of Directors can exercise the power to appoint Alternate Director only if authorized by Articles of Association or by a resolution passed by the Company in a general meeting.
  • If authorized by Articles of Association or by a General Meeting resolution, Board can appoint any person as Alternate Director other than a person holding alternate directorship for any other Director in the Company.
  • Board of Directors can appoint alternate Director to act for the original director during his absence from India for a period of not less than 3 months.
  • Alternate Director can be appointed by passing a resolution in Board meeting or by circulation.
  • Alternate director vacates his office when the original director, in whose place he has been appointed returns to India or when the tenure of original director expires, whichever is earlier.
  • A person who is proposed to be appointed as alternate director for an independent director should be qualified to be appointed as an independent director.
  • If term of original director expires before the original director returns to India, any provision for the automatic re-appointment of retiring director in default of another appointment shall apply to the original, and not to the alternate director.

The following procedure is to be followed for Appointment of an Alternate Director :- https://lexcomply.com/Procedure-under-Companies-Act-2013.php?page=Appointment-of-an-Alternate-Director&key=MTU=

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