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TMI Blog2023 (5) TMI 447X X X X Extracts X X X X X X X X Extracts X X X X ..... and Disclosure Requirements) Regulations, 2015 (hereinafter referred to as 'LODR Regulations'). 2. The facts leading to filing of the present appeal is, that one Dr. (Maj. Gen.) S.S. Chauhan (Retd.) was a Non-Executive Independent Director in the Company and unfortunately died on 22nd November, 2020 resulting in a casual vacancy in the Board of Directors. 3. The casual vacancy was required to be filled up by an appointment of another Independent Director under the provisions of the Companies Act, 2013 (hereinafter referred to as the Companies Act) read with the provisions of the LODR Regulations within three months. 4. On the recommendation of Nomination and Remuneration Committee of the Company, the Board of Directors in the meeting held on 13th February, 2021 resolved and filled the casual vacancy in the office of Independent Director by appointing Maj. Gen (Retd.) Dr. Ajit Singh Dhillon as an Additional Independent Director. At that time the age of Major General was 75 years and 9 months. 5. Under the Companies Act the casual vacancy can be filled up by the Board of Director but the same is required to be approved by the shareholders of the Company within a stipulated period ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ting of individuals as Directors. Section 152(2) of the Companies Act provides that Directors can only be appointed by the Company in a general meeting. Section 161(4) provides for filling up of a casual vacancy by the Board of Director. For facility, Section 152(2) and Section 161(4) of the Companies Act, 2013 is extracted hereunder: Section 152(2) "(2) Save as otherwise expressly provided in this Act, every director shall be appointed by the company in general meeting." Section 161(4) "(4) 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. Provided that 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." 13. A reading of Section 152(2) and Section 161(4) makes it clear that a Director can only be appointed by t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ils the requirement of independent directors in its board of directors without filling the vacancy created by such resignation or removal, the requirement of replacement by a new independent director shall not apply." 18. The aforesaid provision provides that where an Independent Director resigns or is removed from the Board of Directors. Such Independent Director is required to be replaced by a new Independent Director within three months from the date of such vacancy. 19. We find that this provision relates to a vacancy being created on account of removal or resignation of a Director under Section 168 and 169 of the Companies Act. It does not relate to filling up a casual vacancy under Section 161(4) on account of death of a Director. 20. The composition of the Board of Directors is provided under Regulation 17 of the LODR Regulations. Regulations 17(1A) and 17(1C) provides as under: "Board of Directors 17. 1) The composition of board of directors of the listed entity shall be as follows: ............... (1A) No listed entity shall appoint a person or continue the directorship of any person as a non-executive director who has attained the age of seventy five years ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case of appointment of an independent director in the general meeting, an explanatory statement for such appointment, annexed to the notice for the general meeting, shall include a statement that in the opinion of the Board, he fulfils the conditions specified in this Act for such an appointment." (vi) The above provision provides that the appointment of an Independent Director is to be made by the shareholders in the general meeting and an explanatory statement for such appointment is to be annexed in the general meeting which shall include a statement that in the opinion of the Board of Directors the person fulfills the conditions specified in the Act for such appointment. Regulation 17(1A) of the LODR Regulations provides that a special resolution is required to be passed by the shareholders of the Company and the explanatory statement shall indicate the justification for appointment of such a person. (vii) Thus, under the proviso to Section 152(5) the Board of Directors has to justify that the person who is going to be appointed as an Independent Director fulfills the conditions for appointment of such a Director as specified in the Act whereas under Regulation 17(1A) a s ..... X X X X Extracts X X X X X X X X Extracts X X X X
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