Detailed Analysis of Section 160 of companies act 2013

Analysis of section 160 of companies act 2013 in a detailed way to understand the concept and rules in an easy way

As per section 160 of companies act 2013

Any person who is not a retiring person in terms of section 152 shall be eligible for appointment as director at any general meeting (Either Annual general meeting or Extraordinary general meeting )by giving written notice under his hand (with signature) at registered office signifying his candidature as a director at least 14 days before the general meeting.

Here any person means

  • Any person whether or not he is a member of the company.
  • A member may give notice of the candidature of any other person.

Requirement of Deposit

The written notice needs to be accompanied with the deposit of Rs. 1,00,000 or such higher amount as may be prescribed.

Exception: (As per Section 160(1)

  • In case of appointment of independent director.
  • In case of appointment of director recommended by Nomination and Remuneration Committee, if any, constituted under section 178(1);
  • In case of appointment of director recommended by the Board of Directors of the company where such company not required to constitute Nomination and Remuneration Committee.

Refund of Deposit:

The amount deposited shall be refunded if the person purposed as director

  • Gets elected as a director or
  • Gets more than 25% of the total valid votes either on show of hands or by poll on such resolution.

Procedure of company regarding information to members (Section 160(2)

The companies shall inform its member of the candidature of a person for the office of a director as per rules 13 of companies (Appointment and Qualification of Director) Rules,2014

As per Rule 13

Time Limit:

The company shall inform its members at least 7 days before the general meeting.

Manner of serving Notice:

  • By serving individual notice on the members through electronic media to such members who have provided their email address to the company for communication purposes, and in writing to all other members and;
  • By placing a notice of such candidature on the website of the company (if any).

Proviso to Rule 13

Provided that it shall not be necessary for the company to serve individuals notices if the company advertise such candidature at least 7 days before the general meeting

  • At least once in a vernacular newspaper in the principal vernacular language of the district in which the registered office of the company is situated; and
  • At least once in the English language in an English newspaper circulating in the district in which the registered office of the company is situated.

Important Clarifications:

  • The amount of deposit in the case of Nidhi Company shall be Rs. 10,000 instead of Rs. 1,00,000.
  • In the case of section 8 companies, the Board of directors shall decide whether the deposit to be forfeited or refunded if the proposed director fails to secure more than 25% of the valid votes.

 

Exemption or non- applicability of section 160

  • Government Company
  • A subsidiary of a government company, in which entire paid-up share capital is held by the government company.
  • Private Companies
  • Section 8 Companies whose articles provide an election of directors by ballot.

In all the above cases exemption, available if the company has not committed a default in filing of financial statement as per section 137 or annual return as per section 92 with the registrar.

 

Important:

A person right to give the notice to stand for directorship is not affected by any contrary provision in the articles.

section 160 of companies act 2013
section 160 of companies act 2013

 

Priyansh Minocha

Priyansh Minocha is C.E.O and Director at Amonest India Private Limited and Founder at Casolutionsglobal

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