Alternate Director – Section 161(2) of Companies Act, 2013

ALTERNATE DIRECTOR:

Alternate Director is appointed in place of a director who is temporarily unavailable/leave for a period of more than 3 months from INDIA. We can say that an Alternate Director is like a substitute for the original Director. The appointment of alternate director must be authorized by the Articles of the company otherwise we need to alter the Article first.

TERM OF ALTERNATE DIRECTOR

• The Alternate Director has to vacate the office as and when the original Director returns to India.
• The Alternate Director has to vacate the office, when the tenure of the Original Director expires.
• If the tenure of the original director on whose behalf the alternate director is appointed is determined before he returns to India, the provision for the automatic re-appointment of a retiring director shall be applied to the original director and not to the Alternate Director.

KEY POINTS TO CONSIDER BEFORE APPOINTMENT

• The person proposed should not hold any office as Alternate Director of any other Original director in the Company.

For Example: If Mr. Rahul is appointed as an alternate director for Mr. Gaurav then Mr. Rahul cannot be appointed as an alternate director for any other director in the company.

• The person proposed to be an Alternate Director should not be a director in the company.
• Alternate Director and Original Director shall be counted as one for a minimum statutory limit of Public Company and Private Company.
• A Women Director can be appointed as an Alternate Director.
• The proposed person can be appointed as an alternate director for an independent director only if he is qualified to be appointed as an independent director under the provisions of the Act.
• Alternate Director can be appointed by passing a resolution in a Board Meeting or by Circulation.
• Ensure that the proposed person shall not be disqualified under section 164 & 165 of the Companies Act, 2013

*****

CS Pooja Jain – Email id: sclghyy@gmail.com

Disclaimer: The entire contents of this article have been prepared based on relevant provisions and as per the information existing at the time of the preparation. Although care has been taken to ensure the accuracy, completeness, and reliability of the information provided, I assume no responsibility therefore. Users of this information are expected to refer to the relevant existing provisions of applicable Laws. The user of the information agrees that the information is not professional advice and is subject to change without notice. We assume no responsibility for the consequences of use of such information. This is only a knowledge sharing initiative and the author does not intend to solicit any business or profession.