A casual vacancy is a vacancy in the office of a director that arises other than by the expiry of the director’s term of office. Casual vacancies can arise due to the death, resignation, removal, or disqualification of a director.
How is a casual vacancy filled in a company?
The Companies Act, 2013 provides the following provisions for filling a casual vacancy among directors in a company:
- In the case of a public company, the casual vacancy can be filled by the Board of Directors at a meeting of the Board.
- In the case of a private company, the casual vacancy can be filled by the Board of Directors at a meeting of the Board or by the shareholders at a general meeting.
The following are the steps involved in filling a casual vacancy among directors in a company:
- The Board of Directors or the shareholders, as the case may be, passes a resolution to fill the casual vacancy.
- The Board of Directors or the shareholders identify a suitable candidate to fill the casual vacancy.
- The Board of Directors or the shareholders appoint the candidate to the vacant office of director.
MCQs on filling of casual vacancies among directors
- A casual vacancy among directors in a public company can be filled by:
- The Board of Directors at a meeting of the Board.
- The shareholders at a general meeting.
- Either the Board of Directors or the shareholders.
- None of the above.
Answer: The correct answer is (a). Section 161(4) of the Companies Act, 2013, states that a casual vacancy among directors in a public company can be filled by the Board of Directors at a meeting of the Board.
- A casual vacancy among directors in a private company can be filled by:
- The Board of Directors at a meeting of the Board.
- The shareholders at a general meeting.
- Either the Board of Directors or the shareholders.
- None of the above.
Answer: The correct answer is (c). Section 161(5) of the Companies Act, 2013, states that a casual vacancy among directors in a private company can be filled by the Board of Directors at a meeting of the Board or by the shareholders at a general meeting.
- A person who is appointed to fill a casual vacancy among directors shall hold office only up to:
- The date of the next annual general meeting.
- The date of the next board meeting.
- The date of the next shareholders’ meeting.
- The date on which the director whose place he/she is appointed to fill would have retired.
Answer: The correct answer is (d). Section 161(2) of the Companies Act, 2013, states that a person who is appointed to fill a casual vacancy among directors shall hold office only up to the date on which the director whose place he/she is appointed to fill would have retired.