ALTERNATE DIRECTOR – COMPANIES ACT 2013

An alternate director is often appointed as a director only on occasions where a director of a corporation is far away from India for a period of three months or more. No other reasons would qualify. Additionally, alternate directors are frequently appointed at the simple possibility of the initial director’s absence. It’s not necessary that the Board of Directors await the particular absence to form a briefing.

Power to Appoint Alternate Directors

An alternate director is often appointed by the Board of Directors, through authorization by way of a clause in Articles of Association or by passing a resolution within the general meeting.

Notices and Meeting

The appointment of alternate directors wouldn’t keep the initial directors side line. The initial director in addition because the alternate director, is entitled to receive notices of board meetings, and will participate in it. This can be especially relevant when a gathering takes place during a location where the initial director is stationed. it should be noted that both the initial and alternate director cannot attend the identical meeting. The alternate director is specifically appointed to fill the temporary barren of the initial director. 

Video Conferences

Meetings may also be conducted through video conferences, thereby enabling the initial director to attend the meeting. This can be somewhat active in India, yet not fully operational yet as small and medium enterprises might not be able to afford such an option.

Can another Director act on Behalf of Multiple Directors?

A person appointed as an alternate director to at least one of the directors cannot extend his role by acting as an alternate director to a different. Moreover, the alternate director proposed to be appointed shouldn't be an element of the company’s current Board members.

Alternate Director to an Independent Director

A company may like better to appoint an alternate director as an independent director, only if the actual person is qualified for the appointment.

Tenure of an Alternate Director

The alternate director’s tenure involves an end as soon because the original director is back within the country i.e. after a minimum period of three months. Besides that, an alternate director cannot maintain his position within the event of a sudden resignation of the initial director.

Number of Directors

The number of directors during a company, as per the 2013 Act, shall not exceed 15. This can be also pertinent to the appointment of alternate directors because the company cannot appoint an alternate director if the corporate already houses the most number of directors.

Appointment by Circulation

There aren't any prohibitions stipulated for the appointment of an alternate director through circulation. Aside from circulation, directors may also be appointed through a meeting, either conducted physically or through other means.

Legal Provisions related to the appointment of Alternate Director

Legitimate Provisions related to Choosing of Alternate Director are given in segment 161(2) of the companies Act, 2013, which is repeated for your quick orientation:

Section 161(2): Alternate Director

The BOD’s of a company may if so accredited by its articles or by a resolution passed by the company commonly in the meeting, appoint any alternate director for the opposite director within the organization, to act as an alternate director for a director during his absence for a period of not but 3 months from India.

Provided that no individual shall be selected as an alternate director for the position of the independent director unless he's competent to be appointed as an independent director under the provisions of this Act.

Provided further that an alternate director shall not hold office for a duration longer than that allowable to the original director in whose place he has been employed and shall empty the office if and when the director in whose place he has been appointed returns to India.

Provided also that if the term of office of the initial director is determined before he so returns to India, any provision for the automated re-appointment of retiring directors in default of another appointment shall apply to the initial, and to not the alternate director.

Main notable points regarding appointment of Alternate Director.

Please find below few relevant points to know the concept of Alternate Director:

1. The Board may appoint an alternate director if authorized by the Articles of Association of the company or by a resolution passed by the company generally meeting.

2. Proposed Alternate Director mustn't be a private holding any alternate directorship for the opposite director within the corporate.

3. Board can employ Alternate Directors to act on the position of alternate director for the original director during his non-appearance for a period of not less than 3 months. Earlier in Companies Act 1956 it absolutely was absent for a minimum of three months from the state during which Board meetings are ordinarily held.

4. The initial director and also the alternate director can remain on the Board see you later because the above position continues and there is no need for approval by the company in general meeting. But whenever the "original" director returns to the country (India) in question, the alternate director automatically vacates his office and he could even be appointed again when the initial director leaves that country (India).

5. The return of the initial director to the state are enough for the cessation of office of the alternate director whether or not the initial director attends a meeting. E-form DIR-12 shall be filed by electronic means with the Registrar of companies in reverence of vacation of workplace and employment on every occasion.

6. This appointment could even be made at a gathering of the Board or by a circular resolution. The AoA of a private company may provide for the employment of an alternate director.

For communication: Email Id Swati@neusourcestartup.com and Phone Number 9540026175.

The NeuSource Startup Mind is the finest business startup consultant that offers various services of registration like Proprietorship Firm Registration, Partnership Firm Registration, LLP Registration, Company registration, GST Registration, Copyright Registration, ISO Registration Trademark registration and other FSSAI License etc.

Neha Puri

To start a new business is easy, but to make it successful is difficult . So For success, choose the best." Be compliant and proactive from the beginning and choose NEUSOURCE as your guidance partner.