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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 ..... ear that a casual vacancy which occurs in the office of the Director is required to be filled up by the Board of Directors within three months from the date of such vacancy and such appointment is required to be approved by the members in the next general meeting. Regulation 25 of the LODR Regulations, 2015 relates to obligations with respect to Independent Director - The said 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 - Regulation 17(1A) provides that no person shall be appointed or continue the directorship as a Non- Executive Director who has attained the age of 75 years unless a special resolution is passed to that effect by the members in the general meeting - A perusal of the Regulation 17(1C) indicates that the listed entity shall ensure that the appointment of a person on the Board of Directors is approved by the shareholders at the next general meeting or within a period of three months from the date of appointment whichever is earlier. Thus, upon the death of Dr. Chauhan on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ompanies 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. Before such resolution could be passed by the general body of the Company, Maj. Gen (Retd.) Dr. Ajit Singh Dhillon resigned from the post of Additional Director with effect from 24th June, 2021. Thus, the total tenure of Maj. Gen (Retd.) Dhillon was 132 days i.e. from 13th February, 2021 to 24th June, 2021. As a result of the resignation of Major Gen (Retd.) Dhillon, no resolution approving his appointment as an Independent Director could be passed by the shareholders of the Company. 6. NSE issued a notice dated 20th August, 20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 the shareholders of the Company in the general meeting. However, in case where the office of a Director is vacated before his term of office expires which results in a casual vacancy then such casual vacancy can be filled by the Board of Directors which shall subsequently be approved by the members in the immediate next general meeting. 14. In exercise of the powers conferred under the second proviso to sub-section (1) and sub-section (4) of Section 149, the Central Government made the following rules, nam ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 unless a special resolution is passed to that effect, in which case the explanatory statement annexed to the notice for such motion shall indicate the justification for appointing such a person. . (1C) The listed entity shall ensure that approval of shareholders for appointment of a person on the Board of Directors or as a manager is taken at the next general meeting or within a time period of three months from the date of appointment, whichever is earlier. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... planatory 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 special resolution is required to be passed indicating the justification for appointment of such person. (viii) Therefore on a harmonious reading of the proviso to Section 152(5) and Regulation 17(1A), we are of the opinion that when an appointment of an Independent Director above the age of 75 years is made by the Board of Directors under Section 161(4) such appointment is required to be approved by the shareholders of the Company in the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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