In reply to a query: ‘Whether under the law it is compulsory for the private compairies to have rotational directors?’, the Deptt. of Company Affairs
expressed the following views:
In the case of a private company which is not a subsid of a public company, it is not compulsory under the law that they must have rotational directors
unless the Articles of Association of the company so require.
In the absence of any provision in the Articles, directors of an independent private company are entitled to continue until removed underSection2S4 (ie.,
through general body resolution). This decision was delivered in the case of S. Labh Singh vs. Patlaser Mech. Works (P) Ltd. (1987) 61 Compo cas. 6.0.
If the directors do not hold a general ting in time, can they continue till the meeting is held? The
Association held that directors cannot prolong their tenure by not holding a meeting in time. The directors due to retire by rotation must vacate office at the
latest on the last day on which an annual general meeting ought to have been held as per Section 166-Ador Samia Ltd. vs.lndocan Engineering Systems
Ltd. (1999). Retiring directors are, however, eligible for re-election.
Deemed appointment of a retiring Director
‘1he vacancies caused by the retirement of a director by rotation should be filled up at the same meeting or at an adjourned meeting. If it is not so done,
the retiring director shall be deemed to have been appointed at such adjourned meeting except where:
1. at any previous meeting, a resolution for his re-appointment was put to vote, but was lost; or
2. the retiring director has, in writing, expressed his unwillingness to continue; or 3. he has been disqualified; or
4. a special or ordinary resolution is necessary for his appointment; or
5. it is resolved to appoint two or more directors by a single resolution [Section 263(2) Proviso];
6. it is resolved not to fill the vacancy.
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