Amended and updated notes on section 162 of Companies Act 2013. Detail discussion on provisions and rules related to appointment of directors to be voted individually.
Chapter XI (Sections 149–172) of the Companies Act, 2013 (CA 2013) deals with the provisions related to appointment and qualifications of directors. Section 162 of CA 2013 provides for appointment of directors to be voted individually.
Recently, we have discussed in detail section 161 (Appointment of additional director, alternate director and nominee director) of CA 2013. Today, we learn the provisions of section 162 of Companies Act 2013.
The provisions of section 162 are effective from 12-Sept-2013. You may refer Notification No. S.O. 2754(E) issued dated 12.09.2013. In this article, you will learn detail of the provisions of section 162 of the Companies Act 2013.
| Name of Act | The Companies Act 2013 |
|---|---|
| Enacted by | Parliament of India |
| Administered by | Ministry of Corporate Affairs (MCA) |
| Number of Chapters | 29 |
| Number of Sections | 484 (470-43+57) |
| Number of Schedules | 7 |
| You are reading: | |
| Chapter No. | XI |
| Chapter Name | Appointment and Qualifications of Directors |
| Section No. | 162 |
| Section Name | Appointment of directors to be voted individually |
| Monthly Updated Edition | Company Law PDF |
Appointment of Directors to be voted Individually
Separate Resolution for each Directors:
According to section 162(1) of the CA 2013, a motion for the appointment of two or more persons
as directors of the company by a single resolution shall not be moved. That means two or more directors of a company cannot be elected as directors by a single resolution. Therefore, a separate resolution shall be required at a general meeting to appoint each director of the company.
However, a proposal to move a motion for the appointment of two or more persons as directors of the company by a single resolution may be agreed to at the meeting without any vote being cast against it.
In other words, the company may appoint two or more directors by passing a single resolution but before that the meeting first agreed that the appointment shall be made by a single resolution and no vote has been cast against such agreement.
Void Resolution:
As per section 162(2) of the CA 2013, a resolution moved in contravention of sub-section (1) of section 162 shall be void, whether or not any objection was taken when it was moved. That means irrespective of any objection raised at the time of moving resolution for appointment of more than one directors in a single resolution in contravention of section 162(1) of CA 2013, such resolution shall be void.
Motion for Appointment of Directors:
In accordance with the provisions of section 163(3) of the Companies Act, 2013, a motion for approving a person for appointment, or for nominating a person for appointment as a director, shall be treated as a motion for his appointment.
Applicable for Private and Public Companies:
You should note that the provisions of section 162 of CA 2013 for appointment of directors to be voted individually shall be applicable to all the Companies including the private companies. Under the Companies Act, 1956, this provision was only applicable to Public company or a Private company which is a subsidiary of a public company.
However, the private companies have now been exempted under section 462 of CA 2013 vide MCA notification dated 5th June 2015.
Exemption to Government Companies:
The provisions of section 162 shall not be applicable for specified Government Companies as per section 462 of the Companies Act, 2013.
Harmonious Interpretation:
Further, if you read section 152(7)(b)(v) of CA 2013, you come to know that the retiring director shall not be deemed to have been re-appointed at the adjourned meeting where section 162 is applicable.
Accordingly, you should keep in mind that the provisions of section 162 shall be harmoniously interpreted with the provisions of sub-clause (v) of clause (b) of sub-section (7) of section 152 of the Companies Act, 2013.
Section 162 of Companies Act 2013: Appointment of directors to be voted individually
Section 162 shall come into force on 12th September, 2013 vide Notification No. S.O. 2754(E) dated 12.09.2013.
(1) 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.
(2) A resolution moved in contravention of sub-section (1) shall be void, whether or not any objection was taken when it was moved.
(3) A motion for approving a person for appointment, or for nominating a person for appointment as a director, shall be treated as a motion for his appointment.
Exception/ Modification/ Adaptation:
1) Section 162 shall not apply to —
- (a) a Government Company in which the entire paid up share capital is held by the Central Government, or by any State Government or Governments or by the Central Government and one or more State Governments;
- (b) a subsidiary of a Government company, referred to in (a) above, in which the entire paid up share capital is held by that Government company. –Notification No. G.S.R. 463(E) dated 5th June, 2015.
2) In case of Private company section 162 shall not apply. – Notification No. G.S.R. 464(E) dated 5th June, 2015.
3) In case of a Specified IFSC public company, section 162 shall not apply. –Notification No. G.S.R. 08(E) dated 4th January, 2017