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Appointment of Two Directors by Single Resolution Section 162

Companies Act

Appointment of two or more directors by way of passing a single resolution in the general meeting of the shareholders of a company is allowed under section 162 of the Companies Act, 2013 subject to certain conditions.

Two Steps

1) First, obtain the unanimous consent of members for the proposal to pass a single resolution for appointment of two or more directors;
2) Then, take consent of the members, as applicable under the Act i.e. ordinary resolution or special resolution, for that single resolution.


Explanation

• Intention of the company - to move a motion to appoint 2 or more persons as directors by passing only a single resolution.

• At first, a proposal to move such a motion has to be agreed to at the meeting without any vote being cast against it;

It means the unanimous consent of the members present at the meeting has to be obtained at first before passing of such kind of single resolution.

• The condition is - no vote should be cast against it.

Hence, it can be interpreted that members remaining neutral or not voting will not be considered as vote being cast against it.

• The above provisions are applicable on all companies. There is no exception to it.

Sample resolution for such unanimous consent

“RESOLVED THAT the consent of the members be and is hereby given to put the motion for appointment of Mr. ................, Mr. .................. and Ms. ................... as the directors of the company under a single resolution.”

Single resolution - Void

If any vote was cast against the passing of single resolution - then it will become void.

It is irrelevant whether or not any objection was taken when it was moved.






Why at first an additional approval is obtained?

Some companies may try to delude their shareholders by appointing a person as a director who should not be appointed or appoint a director with much higher remuneration than he deserves and thereby appointing him along with an eligible candidate on the same terms as the other one, so that the shareholders do not take much notice of the same.

The main intention of this section is to provide the shareholders of the company with a right to elect the person of their choice with no tampering on the part of the company.

Therefore, specific additional approval is required to make aware the shareholders that this is being done.

Comments

  1. can a single resolution be passed for two matters i.e., appointment of Additional Director and same person as Managing Director by single resolution.

    ReplyDelete

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