Appointment of Director in Casual Vacancy

Aakanksha Singhal

Aakanksha Singhal

Published on: Jun 3, 2020

Khushboo Sharma

Updated on: Sep 30, 2023

★★★★★(19 Rating)

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Introduction

If the office of any Director appointed by the Company in General Meeting is vacated before his term of office expires in the normal course, the resulting casual vacancy may, in default of and subject to any regulations in the articles of the company, be filled by the Board of Directors at a meeting of the Board which shall be subsequently approved by members in the immediate next General Meeting. Any person so appointed shall hold office only up to the date up to which the Director in whose place he is appointed would have held office if it had not been vacated. [Section 161(4)]

Generally, Casual Vacancy in the Office of Director happens under the following situations

1. Resignation by the Director
2. Disqualification of the Director
3. Death of the Director
4. Insolvency of the Director

Applicable Provisions:

1. Section 161, 164 & 165 of Companies Act, 2013
2. Rule 5 of Companies (Appointment and Qualifications of Directors) Rules, 2014

Mandatory Requirements for filling the Casual Vacancy in the Office of Director

1. Board can fill a casual vacancy only in respect of Directors appointed in a General Meeting, if the office of such Director is vacated before the expiry of his term as Director in normal course.
2. If a term of a Director expires because of either retirement by rotation or otherwise it cannot be treated as a casual vacancy.
3. Power to appoint a Director in casual vacancy can be exercised by the Board of Directors, subject to the regulations of the Articles of the Company.
4. Power to appoint a Director in casual vacancy can be exercised by the Board of Directors only by passing resolution at Board Meeting and not by circulation.
5. A person appointed as a Director in casual vacancy shall hold office only up to the date upto which the Director in whose place he is appointed would have held office, if it had not been vacated.
6. The individual proposed to be appointed as Director to fill a casual vacancy does not suffer from any disqualification mentioned under Sections 164 and Section 165 of the Act.
7. If the casual vacancy is in respect of Independent Director, then the person proposed to be appointed as the Director in casual vacancy also fulfills the conditions mentioned in Section 149(6) and Rule 5 of Companies (Appointment & Qualification of Directors) Rules, 2014, in respect of Independent Director.

The Following Procedure is to be followed for “Filling Casual Vacancy in the Office of Director”

Director shall be appointed by two ways to fill the Casual Vacancy

• By appointing an Additional Director by the Board, OR
• By appointing a Director by the Members of the Company in General Meeting.

A. Appointment of an Additional Director to fill the Casual Vacancy
Refer the Procedure for Appointment of Additional Director

OR

B. Appointment of a Director by Members in General Meeting to fill the Casual Vacancy
Refer the Procedure for Appointment of Director.