Section 161 of the Companies Act 2013 provides for appointment of additional, alternate and nominee director on the Board of the any Company. Sub section (4) provides that Board of Public Company can fill up the casual vacancy caused at the office of director (who is appointed by general meeting) before expiry of his tenure.
This clearly indicates that Act don’t permit the private Company’s Board to fill up the causal vacancy. It would be difficult to digest as to why it is so. The entire scheme of the Act is based on bifurcation of Companies in to Small or non small, however in certain section like this, suddenly restriction is placed on the Private Company. I am not sure what is going to be achieved by this.
If you have a family owned company having 3 directors & if casual vacancy is created for 1 director, then remaining two can not by passing a Board resolution fill up the said vacancy. They have to necessarily adopt the route of induction of a director on the Board as Additional Director.
Such additional director will have to be again appointed in the next Annual General Meeting. This act further requires depositing of Rs 1 lacs to the Company for the said election process. Depositing of 1 lacs for election of family director is unnecessary.
If private Company has only two director and vacancy is created for 1 post, then remaining director can take necessary steps to fill up such vacancy & can appoint one more director.
There may not be a need to require a private company directorship candidate to deposit Rs 1 lacs. There should be a provisions available to Private Company to fill up the vacancy by passing a Board Resolution.
Hope sooner or later new government will adopt the prudent view by placing in required exemptions to small private companies who are majority in numbers in India.
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