Here are the notes on the right of persons other than retiring directors to stand for directorship in a company, along with some MCQs and answers:
Section 160 of the Companies Act, 2013 deals with the right of persons other than retiring directors to stand for directorship in a company.
Who can stand for directorship?
A person who is not a retiring director in terms of section 152 of the Companies Act, 2013, is eligible to stand for directorship at any general meeting, subject to the following conditions:
- He/she has left a notice in writing under his/her hand signifying his/her candidature as a director or the intention of some member to propose him/her as a candidate for that office, not less than fourteen days before the meeting.
- He/she has deposited a sum of Rs. 1 lakh or such higher amount as may be prescribed.
The deposit of Rs. 1 lakh will be refunded to the person or the member who proposed him/her if he/she gets elected as a director or gets more than 25% of the total valid votes cast either on show of hands or on poll on such resolution.
Who are retiring directors?
Retiring directors are those directors whose term of office is about to expire at the next annual general meeting. They are eligible to stand for re-election at the meeting.
MCQs on the right of persons other than retiring directors to stand for directorship
- A person who is not a retiring director can stand for directorship at a general meeting only if he/she has left a notice in writing not less than:
- 7 days before the meeting.
- 10 days before the meeting.
- 14 days before the meeting.
- 21 days before the meeting.
Answer: The correct answer is (c). Section 160 of the Companies Act, 2013, requires a person who is not a retiring director to leave a notice in writing not less than 14 days before the meeting.
- The deposit of Rs. 1 lakh for standing for directorship will be refunded to the person or the member who proposed him/her if he/she:
- Gets elected as a director.
- Gets more than 50% of the total valid votes cast either on show of hands or on poll on such resolution.
- Gets more than 25% of the total valid votes cast either on show of hands or on poll on such resolution.
- Gets elected as a director and also gets more than 25% of the total valid votes cast either on show of hands or on poll on such resolution.
Answer: The correct answer is (d). Section 160 of the Companies Act, 2013, states that the deposit of Rs. 1 lakh will be refunded to the person or the member who proposed him/her if he/she gets elected as a director or gets more than 25% of the total valid votes cast either on show of hands or on poll on such resolution.
- A company is not required to follow the requirement of depositing Rs. 1 lakh for standing for directorship in the case of:
- An independent director.
- A director recommended by the Nomination and Remuneration Committee.
- A director recommended by the Board of Directors.
- All of the above.
Answer: The correct answer is (d). Section 160 of the Companies Act, 2013, states that the requirement of depositing Rs. 1 lakh for standing for directorship does not apply in the case of an independent director, a director recommended by the Nomination and Remuneration Committee, or a director recommended by the Board of Directors.