Section 161: Appointment of additional director, alternate director and nominee director
This section is for the appointment of additional, alternate, and nominee directors in a company, outlining the rules and conditions for such appointments.
The section, clause by clause
What the section says
In plain terms
(1)The articles of a company may confer on its Board of Directors the power to appoint any person, other than a person who fails to get appointed as a director in a general meeting, as an additional director at any time who shall hold office up to the date of the next annual general meeting or the last date on which the annual general meeting should have been held, whichever is earlier.
A company's articles can allow its Board of Directors to appoint an additional director at any time, who will hold office until the next annual general meeting or the last date it should have been held, whichever is earlier.
(2)The Board of Directors of a company may, if so authorised by its articles or by a resolution passed by the company in general meeting, appoint a person, not being a person holding any alternate directorship for any other director in the company 3[or holding directorship in the same company], to act as an alternate director for a director during his absence for a period of not less than three months from India:
A company's Board of Directors can appoint an alternate director for a director who will be absent from India for at least 3 months, as long as the articles or a general meeting resolution allow it and the person is not already an alternate director for another director in the company.
provisoProvided that no person shall be appointed as an alternate director for an independent director unless he is qualified to be appointed as an independent director under the provisions of this Act:
provisoProvided further that an alternate director shall not hold office for a period longer than that permissible to the director in whose place he has been appointed and shall vacate the office if and when the director in whose place he has been appointed returns to India:
provisoProvided also that if the term of office of the original director is determined before he so returns to India, any provision for the automatic re-appointment of retiring directors in default of another appointment shall apply to the original, and not to the alternate director.
(3)Subject to the articles of a company, the Board may appoint any person as a director nominated by any institution in pursuance of the provisions of any law for the time being in force or of any agreement or by the Central Government or the State Government by virtue of its shareholding in a Government company.
The Board of a company can appoint a director nominated by an institution, the Central Government, or the State Government, as long as the company's articles allow it.
(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 1[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.
If a director's office is vacated before their term expires, the Board of Directors can fill the casual vacancy at a meeting, subject to subsequent approval by members at the next general meeting, and the new director will hold office until the original director's term would have ended.
The right-hand column is written from the section text, not quoted from it, and it has no legal force. Where the two differ, the left-hand column is the law.
Amendment notes
- 1. Subs. by Act 22 of 2019, s. 25, for section 159 (w.e.f. 2-11-2018).
- 2. The proviso ins. by Act 1 of 2018, s. 50 (w.e.f. 9-2-2018).
- 3. Ins. by Act 1 of 2018, s. 51 (w.e.f. 9-2-2018).
- 4. The words “In the case of a public company,” omitted by s. 51, ibid. (w.e.f. 9-2-2018).
- 1. Ins. by Act 22 of 2019, s. 26 (w.e.f. 2-11-2018).
Referred to by
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Reproduced from the official India Code print for reference. Check the current text on India Code before you rely on it, and read the section alongside its Rules. Nothing here is legal advice.