Examine the validity of the following: Karna Kumar Baag, nominee director appointed by BICCI Bank Ltd. is removed from directorship at the annual general meeting of Reliable Capacitors Limited, a listed company, by passi

Section 161(3) of the Companies Act, 2013, provides that subject to the articles of a company, the Board may appoint any person as a director nominated by any institution in pursuance of the provisions of any law for the time being in force or of any agreement or by the Central Government or the State Government by virtue of its shareholding in a Government company. However, there is an exception to this sub section in case of specified IFSC public company and specified IFSC private company. Companies, which secure financial assistance from financial institutions, banks, major shareholders, debenture holders, etc. usually confer on their lenders, power to appoint and terminate the appointments of their nominees on their Boards. Such power is conferred by incorporating appropriate provisions in the financial assistance agreements. These institutions/banks etc. also insist on borrowing companies to alter their articles of association so as to empower them to appoint and terminate the services of their nominee directors on the Board of the company as and when they like. These directors are known as nominee directors. They are not liable to retire by rotation and hold office at the pleasure of their nominating agencies. They cannot be removed by the company. Procedure to appoint a nominee director is same as appointment as additional director by the Board or appointment of director other than retiring director by the company in general meeting. Depending upon the term and condition of agreement with the appointing bank/institution/ Government, the company may choose any of these two methods. Thus, in view of above, Karna Kumar Baag, a nominee director appointed by BICCI Bank Ltd. Cannot be removed by Reliable Capacitors limited, a listed Company, by passing an ordinary resolution.