Applicability: Public companies( not applicable to Government companies and its subsidiaries)

if the articles of association provided for retirement of all directors in the annual general meeting, then all the directors are liable to directors. According to sec 152(6) of the companies act,2013 2/3 of the total directors(*) are liable to retire by rotation and those directors are called as Retiring directors. out of the retiring directors (2/3rd of Total number of directors) 1/3rd of directors is liable to vacate the office.

So, we need to understand how to calculate the total directors(*)

Rotation of Directors under Companies Act, 2013

Total directors in the company       xxx

(-)Nominee director appointed

by central govt and third party       (xxx)

(-)Additional directors                     (xxx)

(-)Alternate directors                       (xxx)

(-)Independent directors                 (xxx)

(-)Small Shareholders directors     (xxx)

Total number of directors on           xxx(#)

which 2/3rd to be calculated

Retiring directors= 2/3rd of #

Once the retiring directors are known we have to calculate the directors to actually retire from the office that calculation is as follows

Actual directors to retire from office=1/3rd of Retiring directors.

EX:

There are 10 directors in the company out of which 2 are independent directors and 1 director appointed by C.G Please calculate the directors to retire in AGM.

Total directors of the company     10

-Independent directors                   -2

-Nominee director                            -1

Total number of directors on

which 2/3rd to be calculated         7

Retiring directors= 7*2/3=4.67=5(Rounded to next digit)

Actual directors to retire from office=1/3rd of Retiring directors.

Directors to retire from office=5*1/3=1.67=2(Rounded off to nearest digit)

the directors who were in the office for the longer period is liable to retire first.(Age is not the criteria for deciding who to retire first)

if the two or more directors appointed on the same day then directors will retire based on the mutual understanding between them and even mutual understanding is not available then they retire based on Draw by lots.

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Qualification: Student - CA/CS/CMA
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Location: bangalore, Karnataka, India
Member Since: 01 Nov 2020 | Total Posts: 1

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3 Comments

  1. GUNJAN says:

    Are Managing Directors eligible to retire by rotation at AGM, if appointed for a fixed period.

    If yes, can he continue to hold his office of managing director for the remaining period, after such re-appointment or this retirement will lead to break his term.
    Note : Articles is silent about it.
    Pls help

    1. GUNJAN LAHOTY says:

      Are Managing Directors eligible to retire by rotation at AGM, if appointed for a fixed period.

      If yes, can he continue to hold his office of managing director for the remaining period, after such re-appointment or this retirement will lead to break his term.
      Note : Articles is silent about it.
      Pls help

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