Companies Act Section 378P — Appointment of directors
CHAPTER XXI
Commercial / Corporate
Summary
Sub-section (1) states that, unless section 378N says otherwise, the Members who sign the memorandum and articles may name the Board of Directors in those documents. The Board must have at least five directors, and these named directors will manage the Producer Company's affairs until directors are elected under this section.
Sub-section (2) requires that the election of directors be held within ninety days of the Producer Company's registration. However, there is an exception: if an inter-State co-operative society is registered as a Producer Company under sub-section (4) of section 378J, and at least five directors (including those continuing in office under sub-section (1) of section 378N) are holding office on the registration date, then the election period is extended from ninety days to three hundred and sixty-five days.
Sub-section (3) says that every person holds the office of director for a period of not less than one year but not more than five years, as specified in the articles.
Sub-section (4) provides that any director who retires according to the articles is eligible to be re-appointed as a director.
Sub-section (5) states that, except as provided in sub-section (2), the directors of the Board are elected or appointed by the Members at the annual general meeting.
Sub-section (6) allows the Board to co-opt one or more expert directors or an additional director, but not more than one-fifth of the total number of directors. The Board may also appoint any other person as an additional director for a period it deems fit. However, expert directors do not have the right to vote in the election of the Chairman, though they can be elected as Chairman if the articles allow it. Also, the maximum period for which an expert director or additional director holds office cannot exceed the period specified in the articles.
Official Text
(1)Save as otherwise provided in section 378N, the Members who sign the memorandum and the articles may designate therein the Board of Directors, not less than five, who shall govern the affairs of the Producer Company until the directors are elected in accordance with the provisions of this section.
(2) The election of directors shall be conducted within a period of ninety days of the registration of the Producer Company:
Provided that in the case of an inter-State co-operative society which has been registered as a Producer Company under sub-section (4) of section 378J in which at least five directors [including the directors continuing in office under sub-section (1) of section 378N] hold office as such on the date of registration of such company, the provisions of this sub-section shall have effect as if for the words "ninety days", the words "three hundred and sixty-five days" had been substituted.
(3) Every person shall hold office of a director for a period not less than one year but not exceeding five years as may be specified in the articles.
(4) Every director, who retires in accordance with the articles, shall be eligible for re-appointment as a director.
(5) Save as otherwise provided in sub-section (2), the directors of the Board shall be elected or appointed by the Members in the annual general meeting.
(6) The Board may co-opt one or more expert directors or an additional director not exceeding one-fifth of the total number of directors or appoint any other person as additional director for such period as the Board may deem fit:
Provided that the expert directors shall not have the right to vote in the election of the Chairman but shall be eligible to be elected as Chairman, if so provided by its articles:
Provided further that the maximum period, for which the expert director or the additional director holds office, shall not exceed such period as may be specified in the articles.