Alternate directors are appointed by the board as a replacement for a director who is going to be away from India for a period of three months and is not going to be able to attend board meetings for this reason.
Given that the presence of a director is permissible by video
conferencing for many items of business, this appointment might not be that
badly needed, but in certain cases, stakeholders might want to have a physical
presence on the board and therefore, an alternate may be appointed for a
nominee.
An alternate director for an independent must also be
independent. Further, the same person cannot be appointed as an alternate for
two directors.
The alternate director will hold office only up to the period
that the original director is back in India, but while he is on the board, he
is a director for all particular purposes and is entitled to all notices etc.
of the meetings together with the original director. All acts done by him in
his capacity as a director will be valid.
The deeming provision
of vacation of office as soon as the original director is back in India can
cause certain problems. For instance, if the board has appointed B as an
alternate director in place of A to attend board meetings held at the company’s
registered office at Bangalore, B will vacate office as soon as A lands in
Mumbai, even though he might take a flight
the very next day to move out of
India again to be away for further three months and never come to Bangalore.
Also the alternate cannot hold appointment beyond the
appointment of the original. If the original director resigns, or is removed,
the alternate automatically vacate office too, unless appointed by the board as
an additional director.
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