Section 161 of the Companies Act, 2013
Section 161 of the Companies Act, 2013 – Appointment of Additional, Alternate, and Nominee Directors
Overview:
Section 161 provides the legal framework for the Board of Directors to appoint the following types of directors:
Additional Director
Alternate Director
Nominee Director
Director in case of casual vacancy (for public companies only under old Act, not included in 2013 Act)
Key Sub-sections:
1. Section 161(1) – Additional Director:
A company’s Board can appoint an Additional Director, if authorized by its Articles of Association (AOA).
Such a director holds office until the next AGM or last date on which the AGM should have been held, whichever is earlier.
He/she cannot continue beyond that without being reappointed in the general meeting.
2. Section 161(2) – Alternate Director:
The Board may appoint an Alternate Director for a director who is:
Absent from India for more than 3 months.
Must be authorized by AOA or by a resolution passed at a general meeting.
Cannot be appointed for an independent director unless qualified.
Holds office until the original director returns.
3. Section 161(3) – Nominee Director:
A Nominee Director can be appointed by:
A third party under any law or agreement, or
The Government or a public financial institution, as per the terms of lending or other agreement.
Appointment must be supported by the Articles of the company.
4. Section 161(4) – (Casual Vacancy):
This provision (which allowed filling a casual vacancy on the board) was present under the Companies Act, 1956, but not continued under the 2013 Act except for certain government company provisions.
Important Notes:
All appointments under Section 161 must conform to the Articles of Association.
The appointments are temporary in nature and subject to shareholder approval in certain cases.
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