Additional directors are directors appointed between two annual general meetings as per u/s 161(1) of the Companies Act, 2013. They can be appointed if there is casual vacancy on the board and the board of directors need to appoint a director in order to meet the minimum number of directors (even a sole director can act for this purpose).
Alternatively,
if they want to induct someone on the board before the AGM, they can appoint
him or her as an additional director. The basic requirements for this purpose
are that the articles of association of the company must grant the directors
this power and the person to be appointed as additional directors should not
have been someone who has failed to be appointed as a director at a general
meeting.
In other
words, directors cannot use their power to bring on the board someone whom the
shareholders have clearly rejected. The additional director’s office will come
to an end at the next annual general meeting held after his appointment, and if
the shareholders appoint him or her, they can continue on the board.
However, acts
done by them during this term in their capacity will be valid despite the fact
that the shareholders might not re-appoint them. All of the formalities for
appointment of directors will have to be completed for the appointment of
additional directors.
Powers and
Obligations of Additional Director
Though
appointed on a temporary basis, an additional director is vested with the same
powers of a normal director. The additional director must utilize his/her
powers in the best interest of the company and the shareholders. The additional
director can also be appointed as the company’s managing director.
Term of
Additional Director
The person
appointed as additional director shall hold office from the date of his
appointment to the date of the ensuing annual general meeting or date on which
annual general meeting to be held, whichever is later.
What happens
if the annual general meeting is not held on the due date?
The
additional director so appointed has to vacate the office if the general
meeting was not held on the due date.
A resolution can be approved in a board meeting or distributed to name an additional director . he is appointment of additional director in company
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