Alternate Director – Companies Act 2013
Alternate director is a personnel who is appointed by the Board of Directors, as a substitute to a director who may be absent from India, for a period which isn’t less than three months. In this article, we look at the role and procedure for appointment of alternate director in a company. You can also read the following articles, to know more about the role of independent directors and additional director in a company.
Absence from India
An alternate director can be appointed as a director only on occasions where a director of a company is away from India for a period of 3 months or more. No other reasons would qualify. Furthermore, alternate director’s can be appointed at the mere possibility of the original director’s absence. It is not necessary that the Board of Directors await the actual absence to make an appointment.
Power to Appoint Alternate Directors
An alternate director can be appointed by the Board of Directors, through authorization by way of a clause in Articles of Association or by passing a resolution in the general meeting.
Notices and Meeting
Appointment of alternate directors wouldn’t keep the original directors sidelined. The original director as well as the alternate director, is entitled to receive notices of board meetings, and may participate in it. This is especially relevant when a meeting takes place in a location where the original director is stationed. It may be noted that both the original and alternate director cannot attend the same meeting. The alternate director is specifically appointed to fill the temporary void of the original director. For example, if an original director is supposedly stationed at Brussels, and the meeting is being held at Brussels, the alternate director wouldn’t be a part of the meeting due to the availability of the original director.
Meetings can also be conducted through video conferences, thereby enabling the original director to attend the meeting. This is somewhat active in India, yet not fully operational as yet as small and medium enterprises may not be able to afford such an option.
Know more about procedure for conducting board meeting on video conference.
Can an Alternative Director act on Behalf of Multiple Directors?
A person appointed as an alternate director to one of the director’s cannot extend his role by acting as an alternate director to another. Moreover, the alternate director proposed to be appointed should not be a part of the company’s current Board members.
Alternate Director to an Independent Director
A company may choose to appoint an alternate director as an independent director, provided that the particular person is qualified for the appointment.
Tenure of an Alternate Director
The alternate director’s tenure comes to an end as soon as the original director is back in the country i.e. after a minimum period of three months. Besides that, an alternate director cannot maintain his position in the event of a sudden resignation of the original director.
Number of Directors
The number of directors in a company, as per the 2013 Act, shall not exceed 15. This is also pertinent to the appointment of alternate directors as the company cannot appoint an alternate director if the company already houses the maximum number of directors.
Appointment by Circulation
There are no prohibitions stipulated for the appointment of an alternate director through circulation. Other than circulation, directors can also be appointed through a board meeting, either conducted physically or through other means.
Post by Sreeram Viswanath
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