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    Retire by Rotation under the Companies Act, 2013?

    Posted By : Gaurav / Published on : 27-Feb-2021 01:29 PM / View : 361 / Comment : 2
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    Dear CC Members,

    Do managing director(s) and whole-time director(s) are liable to retire by rotation under the companies Act, 2013?

    Kindly share your perspective.
    Read more on : companies under rotation retire

    • Yes, in accordance with Section 152 (6) of CA 2013

      (6) (a) Unless the articles provide for the retirement of all directors at every annual general meeting, not less than two-thirds of the total number of directors of a public company shall—


      (i) be persons whose period of office is liable to determination by retirement of directors by rotation; and
      (ii) save as otherwise expressly provided in this Act, be appointed by the company in general meeting.
      (b) The remaining directors in the case of any such company shall, in default of, and subject to any regulations in the articles of the company, also be appointed by the company in general meeting.
      (c) At the first annual general meeting of a public company held next after the date of the general meeting at which the first directors are appointed in accordance with clauses (a) and (b) and at every subsequent annual general meeting, one-third of such of the directors for the time being as are liable to retire by rotation, or if their number is neither three nor a multiple of three, then, the number nearest to one-third, shall retire from office.
      (d) The directors to retire by rotation at every annual general meeting shall be those who have been longest in office since their last appointment, but as between persons who became directors on the same day, those who are to retire shall, in default of and subject to any agreement among themselves, be determined by lot.

      (e) At the annual general meeting at which a director retires as aforesaid, the company may fill up the vacancy by appointing the retiring director or some other person thereto.

      Explanation.—For the purposes of this sub-section, “total number of directors” shall not include independent directors, whether appointed under this Act or any other law for the time being in force, on the Board of a company.

      indly do check : Exceptions/ Modifications/ Adaptations in this section

       

      21-08-2021 / 02:58:41 PM
      Reply
    • Dear Sir,

      Greetings!!

      As per section

      Section 152 (6) of CA 2013

      (6) (a) Unless the articles provide for the retirement of all directors at every annual general meeting, not less than two-thirds of the total number of directors of a public company shall—


      (i) be persons whose period of office is liable to determination by retirement of directors by rotation; and
      (ii) save as otherwise expressly provided in this Act, be appointed by the company in general meeting.
      (b) The remaining directors in the case of any such company shall, in default of, and subject to any regulations in the articles of the company, also be appointed by the company in general meeting.
      (c) At the first annual general meeting of a public company held next after the date of the general meeting at which the first directors are appointed in accordance with clauses (a) and (b) and at every subsequent annual general meeting, one-third of such of the directors for the time being as are liable to retire by rotation, or if their number is neither three nor a multiple of three, then, the number nearest to one-third, shall retire from office.
      (d) The directors to retire by rotation at every annual general meeting shall be those who have been longest in office since their last appointment, but as between persons who became directors on the same day, those who are to retire shall, in default of and subject to any agreement among themselves, be determined by lot.

      (e) At the annual general meeting at which a director retires as aforesaid, the company may fill up the vacancy by appointing the retiring director or some other person thereto.

      Explanation.—For the purposes of this sub-section, “total number of directors” shall not include independent directors, whether appointed under this Act or any other law for the time being in force, on the Board of a company.

      if we go with this provision it seems that managing directors and whole-time directors are liable to retire by rotation,

       

      However there is  section 196(2) which specifically lays down the provision for tenure of managing director, whole time director and manager i.e.

      No company shall appoint or re-appoint any person as its managing director, whole-time director or manager for a term exceeding five years at a time:

       

      if we combine the interpretation of both the provisions, the specific provision of section 196(2) will prevail over the general provision of section 152(6)

       

      therefore, as per my perspective whole-time directors and managing director of the company are not liable to retire by rotation.

       

      I really hope it help you to some extent,

       

      Thank You !

      20-04-2022 / 05:51:48 AM
      Reply



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