Vacation of office of director

(1)

The office of a director shall become vacant in case—

(a)

he incurs any of the disqualifications specified in section 164;

Proviso

Provided that where he incurs disqualification under sub-section

(2)

of section 164, the office of the director shall become vacant in all the companies, other than the company which is in default under that sub-section.

(b)

he absents himself from all the meetings of the Board of Directors held during a period of twelve months with or without seeking leave of absence of the Board;

(c)

he acts in contravention of the provisions of section 184 relating to entering into contracts or arrangements in which he is directly or indirectly interested;

(d)

he fails to disclose his interest in any contract or arrangement in which he is directly or indirectly interested, in contravention of the provisions of section 184;

(e)

he becomes disqualified by an order of a court or the Tribunal;

(f)

he is convicted by a court of any offence, whether involving moral turpitude or otherwise and sentenced in respect thereof to imprisonment for not less than six months:

Proviso

Provided that the office shall not be vacated by the director in case of orders referred to in clauses (e) and (f)—

(i)

for thirty days from the date of conviction or order of disqualification;

(ii)

where an appeal or petition is preferred within thirty days as aforesaid against the conviction resulting in sentence or order, until expiry of seven days from the date on which such appeal or petition is disposed of; or

(iii)

where any further appeal or petition is preferred against order or sentence within seven days, until such further appeal or petition is disposed of.

Proviso

Provided that the office shall be vacated by the director even if he has filed an appeal against the order of such court;

(g)

he is removed in pursuance of the provisions of this Act;

(h)

he, having been appointed a director by virtue of his holding any office or other employment in the holding, subsidiary company, associate company, ceases to hold such office or other employment in that company.

(2)

If a person, functions as a director even when he knows that the office of director held by him has become vacant on account of any of the disqualifications specified in subsection ( 1 ), he shall be punishable with imprisonment for a term which may extend to one yea r or with fine which shall not be less than one lakh rupees but which may extend to five lakh rupees, or with both five lakh rupees.

(3)

Where all the directors of a company vacate their offices under any of the disqualifications specified in sub-section ( 1 ), the promoter or, in his absence, the Central Government shall appoint the required number of directors who shall hold office till the directors are appointed by the company in the general meeting.

(4)

A private company may, by its articles, provide any other ground for the vacation of the office of a director in addition to those specified in sub-section ( 1 ).

(5)

Articles means the articles of association of a company as originally framed or as altered from time to time or applied in pursuance of any previous company law or of this Act

Notes, amendments & references (8)

Inserted vide Companies (Amendment) Act, 2017 dated 03.01.2018,Effective from 07-05-2018

To view commencement notification, Click Here

To view the notification of Companies Amendment Act,2017 Click Here

Refer Rule 2(1)(s) of the Companies (Specification of Definition Details) Rules,2014. To view the rule, Click Here

Provided that Substituted vide Companies (Amendment) Act, 2017 dated 03.01.2018 Effective from 07-05-2018

To view the notification of Companies Amendment Act,2017 Click Here ]

with imprisonment for a term which may extend to one yea r Omitted vide Companies (Amendment) Act, 2020 dated 28.09.2020 with effect from 21.12.2020. To view the Act, Click Here . To view the commencement notification, Click Here .

Substituted vide Companies (Amendment) Act, 2020 dated 28.09.2020 with effect from 21.12.2020. To view the Act, Click Here . To view the commencement notification, Click Here .