Right of persons other than retiring directors to stand for directorship (Section 160 of the Companies Act, 2013) :
According to section 160 of the Companies Act, 2013:
(i) 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 14days 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.
(ii) Such notice must come along with the deposit of ` 1,00,000 or such higher amount as may be prescribed. Such deposit shall be refunded to such person or, as the case may be, to the member, if the person proposed get selected as a director or gets more than 25% of the total valid votes cast either on show of hands or on poll on such resolution.
Note: In case of a Nidhi company, the notice must be along with the deposit of `10,000. The MCA vide General Circular No. 38/2014, dated 14th October, 2014, has issued a clarification with respect to Refund of deposit under sectlon 160. In case of companies resgistered under section 8 of the Companies Act, 2013, the Board of directors of such company is to decide as to whether the deposit [` 1,00,000 received by them under section 160(1)] made by or on behalf of the person failing to secure more than 25% of the valid votes is to be forfeited or refunded.
(iii) The company shall inform its members of the candidature of a person for the office of director (as discussed above) in such manner as may be prescribed.
Notice of candidature of a person for directorship: Rule 13 of the Companies (Appointment and Qualification of Directors) Rules, 2014 lays down the following points for giving notice of candidature of a person for directorship as under:
(i) The company shall, at least 7days 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 elect ronic 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.
(ii) However, it shall not be necessary for the company to serveindividual notices upon the members as aforesaid, if the company advertises such candidature or intention, not less than 7days 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.
Non applicability of section 160: The Ministry of Corporate Affairs has clarified via Notifications No. 463(E), 464(E) and 466(E)dated 5th June, 2015, that section 160 of the Companies Act, 2013, shall not apply to:
(i) 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;
(ii) A subsidiary of a Government company, referred to in (a) above, in which the entire paid up share capital is held by the Governmment company.
(iii) A Private company
(iv) Companies whose articles provide for election of directors by ballot.