Members of Star Ltd. proposes to appoint Ram and Shyam as directors of the company by passing a single resolution in the general meeting. Can members of Star Ltd. do so? What will be your answer if it is a private compan

CS Executive · Company Law · PYQS · June 2021
Members of Star Ltd. proposes to appoint Ram and Shyam as directors of the company by passing a single resolution in the general meeting. Can members of Star Ltd. do so? What will be your answer if it is a private company?

Answer & Explanation:

Provisions of the Companies Act, 2013: Section 162 of the Companies Act, 2013 states that at a general meeting of a company, a motion for the appointment of two or more persons as directors of the company by a single resolution shall not be moved unless a proposal to move such a motion has first been agreed to at the meeting without any vote being cast against it. This means that ordinarily, each director must be appointed by a separate resolution. Application to Star Ltd. (Public Company): In the case of Star Ltd., which is implied to be a public company, the members cannot appoint Ram and Shyam as directors by passing a single resolution in the general meeting, unless a proposal to move such a motion has first been agreed to at the meeting without any vote being cast against it. This implies that a unanimous consent or a specific prior resolution allowing a single resolution for multiple appointments is required. Without such prior agreement, separate resolutions are mandatory. Answer if it is a Private Company: Pursuant to the Exemption Notification dated 05/06/2015, provisions of Section 162 of the Companies Act, 2013 are not applicable to a private company which has not committed a default in filing its financial statements under Section 137 of the Companies Act, 2013 or annual return under Section 92 of the Companies Act, 2013 with the Registrar of Companies. Therefore, if Star Ltd. were a private company and had not defaulted under Section 137 or Section 92 of the Companies Act, 2013, it could appoint more than one director by passing a single resolution. Conclusion: For Star Ltd. (public company), appointing Ram and Shyam by a single resolution is generally not allowed unless there's a prior agreement without dissent. For a private company, it is allowed if the company has not defaulted in filing its financial statements or annual returns.

Topics: Company Law

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