Section 160 of Companies Act, 2013 – Right of persons other than retiring directors to stand for directorship

  • Updated Till : December 13, 2017

SECTION 160. RIGHT OF PERSONS OTHER THAN RETIRING DIRECTORS TO STAND FOR DIRECTORSHIP

[Effective from 1st April, 2014]

EXEMPTIONS

Section 160 shall not apply to a private company, vide Notification No. 464(E) dated 5th June, 2015.

The above mentioned exception shall be applicable to a private company which has not committed a default in filing its financial statements under section 137 of the said Act or annual return under section 92 of the said Act with the Registrar, vide amendment notification F. No. 1/1/2014- CL-V dated 13th June 2017.

Sections 160 shall not apply to a Section 8 Company whose articles provide for election of directors by ballot, vide Notification No. 466(E) dated 5th June, 2015.

The above mentioned exception shall be applicable to a Section 8 company which has not committed a default in filing its financial statements under section 137 of the said Act or annual return under section 92 of the said Act with the Registrar, vide amendment notification G.S.R. 584(E) dated 13th June 2017. 

Sections 160 shall not apply to a Specified Public Company as per the articles framed by the company, vide Notification No. 08(E) dated 04th January, 2017.

(1) A person who is not a retiring director in terms of section 152 shall, subject to the provisions of this Act, be eligible for appointment to the office of a director at any general meeting, if he, or some member intending to propose him as a director, has, not less than fourteen days before the meeting, left at the registered office of the company, a notice in writing under his hand signifying his candidature as a director or, as the case may be, the intention of such member to propose him as a candidate for that office, along with the deposit of one lakh rupees or such higher amount as may be prescribed which shall be refunded to such person or, as the case may be, to the member, if the person proposed gets elected as a director or gets more than twenty-five per cent. of total valid votes cast either on show of hands or on poll on such resolution.

(2) The company shall inform its members of the candidature of a person for the office of director under sub-section (1) in such manner as may be prescribed.

EXEMPTIONS

In case of a Nidhi Company, in Section 160 (1), for the words “one lakh rupees”, the words ten thousand rupees” shall be substituted; vide Notification No. GSR 465(E) dated 5th June, 2015.

Section 160 shall not apply to:

(a) a Government Company in which the entire paid up share capital is held by the Central Government, or by any State Government or Governments or by the Central Government and one or more State Governments;

(b) a subsidiary of a Government company, referred to in (a) above, in which the entire paid up share capital is held by that Government company vide Notification No. GSR 463(E) dated 5th June, 2015.

The above mentioned exception shall be applicable to a government company which has not committed a default in filing its financial statements under section 137 of the said Act or annual return under section 92 of the said Act with the Registrar, vide amendment notification F. No. 1/2/2014- CL-V dated 13th June 2017. 

Section 160 shall apply to a Specified IFSC public company  as per the articles framed by the company, vide Notification no. 08(E) dated 04th Jauary, 2017.

Applicable Rules

Companies (Appointment and Qualification of Directors) Rules, 2014

[Effective from 1st April, 2014]

Rule 13. Notice of candidature of a person for directorship.—The company shall, at least seven days before the general meeting, inform its members of the candidature of a person for the office of a director or the intention of a member to propose such person as a candidate for that office—

(1) by serving individual notices, on the members through electronic mode to such members who have provided their email addresses to the company for communication purposes, and in writing to all other members; and

(2) by placing notice of such candidature or intention on the website of the company, if any:

Provided that it shall not be necessary for the company to serve individual notices upon the members as aforesaid, if the company advertises such candidature or intention, not less than seven days before the 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 circulating in that district, and at least once in English language in an English newspaper circulating in that district.

Applicable Circulars

Right of persons other than retiring directors to stand for directorship – Refund of deposit under section 160 of the Companies Act, 2013 in certain cases.

Circular No.38/2014 dated 14-10-2014

Clarity has been sought by companies registered under section 8 of the Companies Act, 2013 (corresponding to section 25 of Companies Act, 1956)about the manner in which the amount of deposit of rupees one lakh received by them under sub-section(1) of section 160 of the Companies Act, 2013 (Act) is to be handled if the depositor fails to’ secure more than twenty five per cent of the total valid votes. It has been noted that the relevant provision is silent on such issue.

  1. The matter has been examined in the Ministry and it is clarified that in such cases, the Board of directors of a section 8 company is to decide as to whether the deposit made by or on behalf of the person failing to secure more than twenty-five percent of the valid votes is to be forfeited or refunded.

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