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Vacation of office of director (Section 167 of the Companies Act, 2013)

Vacation of office of director (Section 167 of the Companies Act, 2013) :

According  to section 167 of the Companies Act, 2013:

(i) The office of a director shall become vacant in case [Section 167(1)]-

(a) he incurs any of the disqualifications specified in section 164;

(b) he absents himself from all the meetings of the Board of Directors held during a period of 12months 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 6months.

It is further 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 or associate company, ceases to hold such office or other employment in that company.

(ii) 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 sub -section

(1), he shall be punishable with imprisonment for a term which may extend to one year or with fine which shall not be less than Rs. 1,00,000 but which may extend to Rs. 5,00,000, or with both. [Section 167(2)]

(iii) 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. [Section 167(3)]

(iv) 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). [Section 167(4)]

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