SECTION 160 OF THE COMPANIES ACT, 2013
Chapter-XI Appointment and Qualifications of Directors
Right of Persons Other than Retiring Directors to Stand for Directorship
This section deals with the rights of person other than retiring director under Section 152 of the Companies Act, 2013
(1) A person who is not a retiring director in terms of section 152 shall, subject to the provisions of this Act, be eligible for appointment to the office of a director at any general meeting, if he, or some member intending to propose him as a director, has, not less than fourteen days before the meeting, left at the registered office of the company, a notice in writing under his hand signifying his candidature as a director or, as the case may be, the intention of such member to propose him as a candidate for that office, along with the deposit of one lakh rupees or such higher amount as may be prescribed which shall be refunded to such person or, as the case may be, to the member, if the person proposed gets elected as a director or gets more than twenty-five per cent. of total valid votes cast either on show of hands or on poll on such resolution.
As per Section 160 notice alongwith the deposit of Rs. One Lakhs is required to be given at least 14 days before the general meeting at the Registered Office of the Company.
Provided that requirements of deposit of amount shall not apply in case of appointment of an independent director or a director recommended by the Nomination and Remuneration Committee, if any, constituted under sub-section (1) of section 178 or a director recommended by the Board of Directors of the Company, in the case of a company not required to constitute Nomination and Remuneration Committee.
(2) The company shall inform its members of the candidature of a person for the office of director under sub-section (1) in such manner as may be prescribed.
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Who Are Eligible To Give Notice Under Section 160?
As per sub section (1) of section 160 a person who is not a retiring director shall be eligible for appointment to the office of a director at any General Meeting (GM) of the company.
- Any Individual Member of the Company
- A Non-Member of the Company
- Any member (including Body Corporate) intend to proposed a member or non- member as a director can give notice for them.
Notice of Candidature of a Person for Directorship
The company shall, at least seven days before the General Meeting, inform its members of the candidature of a person for the office of a director or the intention of a member to propose such person as a candidate for that office-
- by serving individual notices, on the members through electronic mode to such members who have provided their email addresses to the company for communication purposes, and in writing to all other members; and
- by placing notice of such candidature or intention on the website of the company, if any:
Provided that it shall not be necessary for the company to serve individual notices upon the members as aforesaid, if the company advertises such candidature or intention, not less than seven days before the meeting at least once in a vernacular newspaper in the principal vernacular language of the district in which the registered office of the company is situated, and circulating in that district, and at least once in English language in an English newspaper circulating in that district.
Appointment in General Meeting
This section will apply if any directors are appointed in General meeting that may be either AGM (Annaul General Meeting) or EGM (Extraordinary General Meeting) of the company.
Appointment of Director Other Than Retiring by Rotation
In accordance with the explanation given under section 152, the expression “retiring director” means a director retiring by rotation. Thus, the person who is not a director retiring by rotation shall use this right to stand for directorship in a company.
Appointment of the following person for which candidature has been received, the provision of section 160 would apply:
- appointment of independent director
- appointment of alternate director and nominee director
- appointment of director to fill casual vacancy
- appointment of director in GM who was appointed as an additional director by BOD under section 161(1) of the companies Act 2013; and
- any other person seeking appointment as director at general meeting of the company.
Who will give the Notice of Proposal as Director?
Notice u/s 160 can be given either by the candidate himself or any member of the company.
However, a Preference shareholder can’t give such notice because of the fact that they have no voting right in General Meeting of a company.
Further, there is no requirement of minimum shareholding i.e. the member can give such notice irrespective of shareholding.
As per section 102(2) the appointment of Director other than retiring directors shall be deemed special business and therefore a statement shall be annexed to the notice calling GM (General Meeting) for such appointment.
Which Companies are exempted from Application of Section 160?
Following class of companies are exempted from complying the provisions of section 160 of the Companies Act 2013:
- Section 8 companies
- Private companies
- Nidhi companies
- Government companies
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