Section 160 Of The Companies Act 2013

Right of Persons other than Retiring Director to Stand for Directorship

A. Who are Eligible to Give Notice under Section 160?

Any individual who is not a retiring director is eligible for appointment as a director at any General Meeting (GM) of the company. This will apply only if any directors are appointed in a GM that may either be an AGM (Annual General Meeting) or EGM (Extraordinary General Meeting) of the company; if any directors are appointed by the BoD then these provisions would not apply.

B. Appointment of Directors other than retiring by Rotation:

This section would apply to the appointment of:

a) Alternate Director and Nominee Directors;

b) Independent Directors;

c) Director to fill the casual vacancy;

d) Director in GM who was working as an Additional Director by BOD; and

e) Any other individual wanting to be appointed as Director at GM of the company.

C. Notice of Proposal

An individual can stand for directorship only if he or some member proposes him as a director with a notice in writing at the registered office of the company signifying his candidature as a director or, the intent of such member to propose him as a candidate for directorship. Such notice can be either given by the candidate himself or by a member who intends to propose a candidate. Though, a preference shareholder isn’t permitted to give such notice because they have no voting rights in a general meeting of a company.

There are no fees for minimum shareholding i.e. the member can give such notice irrespective of shareholding.

The appointment of directors other than retiring directors is a special business and a statement shall be attached to the notice calling GM for such appointment.

D. Deposit amount for Notice

The notice for proposing the candidature of an individual as director of the company should be given with a deposit of ₹1,00,000/- or such a higher amount as may be specified.

The deposit amount should be refunded in the following two cases:

a) If the proposed person gets 25% or more votes; or

b) If such a proposed person gets elected.

If the proposed person doesn’t get elected or a minimum of 25% votes then the deposit amount is forfeited.

E. Exempted Companies from Section 160

Companies that are exempted are:

1) (Non-Profit) Companies

2) Private Companies

3) Nidhi Companies

4) Government Companies

Section 160 of Companies Act 2013:

[Right of persons other than retiring directors to stand for directorship]

(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 intends 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 percent. of total valid votes cast either on a show of hands or on the poll on such resolution.

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 the director under subsection (1) in such manner as may be prescribed.