A was appointed as the Managing Director of OPQ Ltd. for a period of 4 years on his 66th birthday on 1st June, 2016. A Board Resolution was passed to extend his term of office by another five years and the same was appro

According to Section 196(1) of the Companies Act, 2013, a re-appointment of any person as managing director, whole-time director or manager cannot be made earlier than one year before the expiry of his term as managing director. According to Section 196(3) of the Companies Act, 2013, the managing director can be continued in employment after he has attained the age of 70 years only by passing a special resolution in which case the explanatory statement annexed to the notice for such motion shall indicate the justification for such re-appointment. In the instant case, the term of office of managing director comes to an end on 31st May, 2020. The re-appointment of managing director is sought to be made on 21st May, 2019 i.e. more than one year before the expiry of his term of office. Therefore, the re-appointment of managing director is not in order as the same is not in line with Section 196(1). Further, as the managing director completes 70 years on 31st May, 2020, his re-appointment requires special resolution. In the instant case, his re-appointment has been made by passing an ordinary resolution and not by special resolution as mandated by Section 196 (3) which is also not in order.