Option to adopt principle of proportional representation for appointment of directors (Section 163 of the Companies Act, 2013) :

According to section 163 of the Companies Act, 2013:

(i) Notwithstanding anything contained in the Companies Act, 2013, the art icles of a company may provide for the appointment of not less than two-thirds of the total number of the directors of a company in accordance with the principle of proportional representation.

(ii) Such appointments may be made once in every 3years whether by the single transferable vote or by a system of cumulative voting or otherwise. Single transferable vote means, a candidate gets elected if he gets the required number of votes fixed as quota. These systems of voting ensure that the Board will have fair representation of the minority interest.

(iii) Casual vacancies of such directors shall be filled as provided in sub-section (4) of section 161.

Non applicability of section 162: The Ministry of Corporate Affairs has clarified via Notifications No. 463(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.