Introduction: In the corporate world, the appointment and regularization of directors play a pivotal role in governance. While directors are typically appointed in general meetings, the process of regularizing an additional director in an Extra-Ordinary General Meeting (EGM) raises pertinent questions. This article delves into the legal framework surrounding this issue, examining relevant sections of the Companies Act, 2013, and providing insights into the interpretation of these provisions.
A director of the company is generally appointed in the General meeting of the company, as pursuant to section 152(2) which states as “Save as otherwise expressly provided in this Act, every director shall be appointed by the company in general meeting”, which means a director should generally be appointed in general meetings (whether AGM or EGM), and he further may be appointed in meeting other than general meeting (Board Meeting) of the company if it has been expressly provided under Companies Act, 2013.
Further as per section 161 which lays down provision relating to appointment of additional director in a company. An Additional director is director which is permitted to be appointed by the board of the company in its board meeting. The additional director shall hold office as a director in the company till next annual general meeting of the company (or due date of AGM if not held). In the upcoming AGM the additional director may be regularized i.e., he may be appointed as normal director in the general meeting as provided under section 152 of the act.
An important issue to note as on combined reading of section 152 and 161 arises is “Can an additional director be regularized in EGM of the company, since his tenure is fixed by companies act till the next AGM?”
On combined reading of both the sections and by interpreting the provisions harmoniously, as section 151 implies that a director may be appointed in general meetings (whether AGM or EGM), but on further reading of section 161 which makes it clear that the additional director shall hold office till date of AGM as additional director of the company. He may further be appointed as normal director in the upcoming AGM.
It is said that “a lawmaker can-not give power from one hand and take it back from the other” which applies here that lawmaker has given power to appoint director in General Meeting of the company (section 152) he can-not take it back from the other section i.e., 161 just by virtue of tenure of appointment. Further the section only imposes a restriction on tenure of appointment and not on procedure of appointment.
Therefore, it is held that a director may also be regularized in EGM of the company.
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