Additional Director – Companies Act 2013
The Board of Directors of a Company, if authorized by the Articles of Association, may appoint an additional director. The power conferred on the directors to appoint an additional director is a temporary power vested in them, and this will be subject to revision or confirmation in the General Meeting.
Term for Additional Director
A person appointed as an additional director can occupy their post until the date of the next Annual General Meeting. In the absence of an Annual General Meeting, their term of appointment will conclude on the date on which the annual general meeting should have been held.
Powers and Obligations
Though appointed on a temporary basis, an additional director is vested with the same powers of a director. Moreover, they are subject to all obligations and limitations of a director. They are also entitled to seek appointment as a permanent director at the Annual General Meeting. The additional director must utilize his/her powers in the best interest of the company and the shareholders.
Number of Additional Directors
The number of directors and additional directors taken together shouldn’t exceed the number specified in the Articles of Association. For example, if the Articles of Association of a company permits the appointment of 11 directors in total, and the company currently houses 5 full-time directors, the Board of Directors may appoint 6 additional directors.
Further the Board is not authorized to appoint any person as an additional director whose resolution for appointment is rejected by the shareholders in a general meeting.
Method of Appointment
The additional director may be appointed in a meeting of the Board, which may be held physically or through video conferencing or other audiovisual means. The other applicable method of appointment is through circulation, on which no prohibitions have been meted out.
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Eligibility of Additional Directors for Re-appointment
Section 160 of the 2013 Act provides any person other than retiring directors has the right to stand for directorship. Such a director is considered eligible for the post provided that a notice in writing is sent to the registered office of the company at-least 14 days prior to the general meeting proposing such person as a director.
Additional Director as a Managing Director
The Board of Directors may appoint an additional director as the company’s managing director. The appointment doesn’t mean the additional director escapes the rule pertaining to the terms of service (cessation of term on the date of annual general meeting), but the additional director may apply for re-election, and if elected again, may continue the position of a managing director.