Section 152 of CA 2013 : Section 152: Appointment Of Directors

Explanation using Example

Imagine a new tech startup, "InnovateX," is incorporated with four subscribers to the memorandum. The company's articles of association do not specify the process for appointing the first directors. According to Section 152(1) of The Companies Act, 2013, the four subscribers automatically become the first directors of InnovateX until the company holds a general meeting to appoint official directors.

After a year of operation, InnovateX decides to expand its board. They call a general meeting, as required by Section 152(2), where shareholders vote to appoint two new directors to the board. The candidates have already provided their Director Identification Numbers (DINs) and declared they are not disqualified from directorship, complying with Section 152(3) and (4).

Prior to officially taking their roles, the newly appointed directors submit written consent to act as directors, which is filed with the Registrar within the stipulated 30-day period, fulfilling the requirement of Section 152(5).

As InnovateX is a private company, it decides to not have its directors retire by rotation. However, if it were a public company, Section 152(6) would require that at least two-thirds of the board be subject to retirement by rotation, with one-third retiring each year, and the vacancies filled at the annual general meeting.