Vacation of office of
Director
Which
sections to read: Section 167, 164, 152, 154, 184 of
Companies Act 2013
Meaning:
Vacation of office of Director means expiry date of Director from the office of
the company.
When
he/she vacates the office: Section 167 of Companies Act 2013
says that the Director becomes vacant in the following cases;
a. When
he/ she incurs any of the disqualifications specified in Sec 164
i.
He is of unsound mind and stands as an
insolvent and his application is pending;
ii.
He is an undischarged insolvent
iii.
He has applied to be adjudicated as an
insolvent and his application is pending;
iv.
He has been convicted by a court of any
offence, whether involving moral turpitude or otherwise and sentenced in
respect thereof to imprisonment for not less than six months and a period of
five years has not elapsed from the date of expiry of the sentence;
Provided
that if a person has been convicted of any offence and sentenced in respect
thereof to imprisonment for a period of seven years or more, he shall not be
eligible to be appointed as a director in any company;
v.
An order disqualifying him for
appointment as a Director has been passed by a court or Tribunal and the order
is in force;
vi.
He has not paid any calls in respect of
any shares of the company held by him, whether alone or jointly with others,
and six months have elapsed from the last day fixed for the payment of the
call;
vii.
He has been convicted of the offence
dealing with related party transactions under Section 188 at any time during
the last preceding five years; or
viii.
He has not complied with Sub section (3)
of Sec 152 which says that’
-No
person shall be appointed as a Director of a company unless he has been
allotted the Director Identification Number (DIN)
ix.
No person who is or has been a director
of a company which, has not filed Financial statements or annual returns for
any continuous period of three financial years; or
x.
No person who is or has been a director
of a company which, has failed to repay the deposits accepted by it or pay
interest thereon or to redeem any debentures on the due date or pay interest
due thereon or pay any dividend declared and such failure to pay or redeem
continues for one year or more;
Shall be
eligible to be re-appointed as a director of that company or appointed in other
company for a period of five years from the date on which the said company
fails to do so.
b. He
absents himself from all the meetings of the Board of Directors held during a
period of twelve months with or without seeking leave of absence of the Board;
This means the
director has to be there in atleast one Board meeting in a period of 12 months.
For this calculation, it should be calculated from the date of last meeting
attended by the Director. However, professionals have different point of view
on this, some say;
The period of 12
months should be reckoned from the first board meeting held after the
commencement of the Act and which the Director missed. That will be month one.Then
count upto 12 months. If there is a board meeting in the 12th month and the
director misses it then he will vacate office at the end of the meeting.
c. He
acts in contravention of the provisions of Sec 184 relating to entering into
Contracts and arrangement in which he is directly or indirectly interested;
d. He
fails to disclose his interest in any contract or arrangement in which he is directly
or indirectly interested, in contravention of the provisions of Sec 184
e. He
becomes disqualified by an order of a court or the Tribunal
f. He
is convicted by court of any offence, whether involving moral turpitude or
otherwise and sentenced in respect thereof to imprisonment for not less than
six months;
Provided that the office shall be
vacated by the Director even if he has filed an appeal against the order of
such court;
Please
note that Proviso to Sec 167(1)(f) is proposed to be substituted by the below
mentioned clause as introduced by Lok Sabha on 16th March 2016;
Provided
that the office shall not be vacated by the director in case of orders referred
to in clauses (e) and (f)-
(i)
For thirty days from the date of
conviction or order of disqualification;
(ii)
Where an appeal or petition is preferred
within thirty days as aforesaid against the conviction resulting in sentence or
order, until expiry of seven days from the date on which such appeal or
petition is disposed of; or
(iii)
Where any further appeal or petition is
preferred against order or sentence within seven days, until such further appeal
or petition is disposed of.
g. He
is removed in pursuance of the provisions of this act;
h. He
having been appointed a director by virtue of his holding any office or other
employment in the holding, subsidiary or associate company, ceases to hold such
office or employment in that company.
For more details, contact CS Neha Seth At csnehaseth.cp@gmail.com
