Summary: The procedure for re-appointment of directors retiring by rotation under the Companies Act, 2013 is governed by Section 152(6) and (7) along with related provisions. At least two-thirds of the total directors, excluding specified categories, must be liable to retire by rotation. At every Annual General Meeting (AGM), one-third of such directors retire based on tenure, with those longest in office retiring first. In cases of equal tenure, retirement is decided by mutual agreement or draw of lots. The retiring director must provide consent for reappointment and submit a declaration confirming non-disqualification under Section 164. The Board must convene a meeting to approve and recommend reappointment, followed by inclusion of the resolution in the AGM notice. Shareholders vote on the resolution, and if approved, the director is reappointed. If not filled, reappointment may be deemed in certain cases. Statutory registers must be updated, and DIR-12 filing is generally not required unless designation changes.
Governing provisions of Companies Act, 2013
1. APLLICABLE PROVISIONS:
- Section 152(6), (7) – Retirement and Reappointment by Rotation
- Section 164 – Disqualifications for Appointment of Director
- Section 162– Appointment of Directors to be Voted Individually
- Section 170 – Register of Directors and key Managerial Personnel and their Shareholding
- Section 159 – Penalty for Default of Certain Provisions
- SS-1 & SS-2 – Secretarial Standards by ICSI
- Companies (Appointment and Qualification of Directors) Rules, 2014
- Companies (Meetings of Board and its Powers) Rules, 2014
2. PROCEDURE:
| Sr. No | Steps | Timeline / Date |
| 1. | IDENTIFY DIRECTORS LIABLE TO RETIRE BY ROTATION
As per Section 152(6), Companies Act, 2013 unless otherwise provided in the Articles of Association (AOA), not less than two-thirds of the total number of directors must be directors liable to retire by rotation. ‘total no. of directors; exclude: a. Independent director b. Nominee director c. Additional director d. Alternate director e. Small shareholder director |
|
| 2. | DETERMINE THE RETIRING DIRECTOR
a. Retirement Rule – 1/3rd of directors liable to retire by rotation shall retire at every AGM. b. Basis of Retirement – Those longest in office since last appointment shall retire first. c. Fraction Rule – If the number is neither three nor a multiple of three, then nearest whole number is taken. d. Same Appointment Date – If more than one director appointed on the same day: 1. Retirement order decided by mutual agreement, or 2. If no agreement, determined by draw of lots. |
– |
| 3. | CONSENT FROM DIRECTOR
Obtain consent of the retiring director, whether the retiring director is willing to be re-appointed as a director or not. |
– |
| 4. | OBTAIN DECLARATION IN FORM DIR-8
Secure a declaration from the retiring director confirming that he/she is not disqualified under Section 164 of the Companies Act, 2013. |
– |
| 5. | HOLD BOARD MEETING
a. Draft and Send Board Meeting Notice Issue notice of the Board Meeting as per Section 173(3) and SS-1, along with the agenda and draft resolutions. b. Convening of Board Meeting Convene the Board Meeting to consider and approve the reappointment, and to recommend the same in the AGM notice. c. Minutes Preparation and Circulation |
at least 7 clear days in advance |
| 6. | CONDUCT ANNUAL GENERAL MEETING
a. AGM Notice
b. Conduct AGM
c. Minutes Preparation and Circulation |
at least 21 clear days before AGM |
| 7. | UPDATE STATUTORY REGISTERS
Update the Register of Directors and Key Managerial Personnel and their Shareholding as per Section 170, Companies Act, 2013. |
– |
| 8. | REQUIREMENT OF FILLING FORM DIR 12
The reappointment of a director who retires by rotation at the AGM and is reappointed does not trigger the requirement to file DIR-12. However, It is required to be filled in case of change in designation of Director. |
– |
3. APPLICABILITY FOR PRIVATE COMPANIES:
| The provisions of Section 152(6) regarding retirement of directors by rotation are not mandatorily applicable to private companies.
However, if the Articles of Association of a private company expressly adopt these provisions, the company must comply accordingly. |
– |
**This document is for educational purposes only and does not constitute legal advice.
****
Author : M/s Ronak Jhuthawat & Co, Practicing Company secretary Call: +91 98874 22212 | Email: compliancerjac@gmail.com
Author Bio
