Text of the provision of Section 161(4) of Companies Act, 2013: In the case of a public company, if the office of any director appointed by the company in general meeting is vacated before his term of office expires in the normal course, the resulting casual vacancy may, in default of and subject to any regulations in the articles of the company, be filled by the Board of Directors at a meeting of the Board.
Provided that any person so appointed shall hold office only up to the date up to which the director in whose place he is appointed would have held office if it had not been vacated.
Provisions of this section are not applicable on Private Company.
Board can fill a casual vacancy only in respect of directors appointed in a general meeting, if the office of such director is vacated before the expiry of his term as director in normal course.
If a term of a director expires because of either retirement by rotation or otherwise it cannot be treated as a casual vacancy.
Power to appoint a Director in casual vacancy can be exercised by the Board of Directors, in default of and subject to the regulations of the articles of the company.
Power to appoint a Director in casual vacancy can be exercised by the Board of Directors only by passing resolution at Board Meeting and not by circulation.
A person appointed as a Director in casual vacancy shall hold office only up to the date upto which the director in whose place he is appointed would have held office, if it had not been vacated.
The following procedure is to be followed for appointment of director in casual vacancy :-
1. Ensure that the individual proposed to be appointed as director to fill a casual vacancy does not suffer from any disqualification mentioned under Sections 164 and Section 165 of the Act.
2. If the casual vacancy is in respect of independent director, then ensure the person proposed to be appointed as the director in casual vacancy also fulfills the conditions mentioned in section 149(6) and Rule 5 of Companies (Appointment & Qualification of Directors) Rules, 2014, in respect of independent director.
3. Ensure that the person who is to be appointed as Director in casual vacancy must have Director Identification Number (DIN) before being appointed as director. [Section 152 (3)]. If he does not have DIN, follow the procedure prescribed for obtaining DIN.
4. Ensure that person proposed to be appointed as a director has furnished his DIN to the Company and a declaration in Form DIR.8 stating that he is not disqualified to become a director under the provisions of Companies Act, 2013. [Section 152(4) and Rule14(1) of Companies (Appointment & Qualification of Directors) Rules, 2014 .
5. Before appointing a person as Director, Obtain his written consent to act as Director in Form No. DIR-2. along with the following documents:
a. Valid ID Proof
b. Valid Address Proof
[Section 152(5) and Rule 8 of Companies (Appointment and Qualification of Directors) Rules, 2014].
6. Issue not less than 7 days notice and agenda of Board meeting, or a shorter notice in case of urgent business, in writing to every director of the company at his address registered with the company (Section 173(3). Also follow the procedure prescribed for issuing and signing of notice and convening of Board Meeting.
7. Hold a meeting of Board of Directors-
Pass the necessary Board Resolution for the appointment of Director to hold the office up to the date upto which the director in whose place he is appointed would have held office, if it had not been vacated.[Proviso to Section 161(4)]. Power to appoint a Director in casual vacancy cannot be exercised by the Board of Directors by passing resolution by circulation (Section 161(4).
To authorize Company Secretary or any Director to sign and file the relevant form with Registrar of Companies and to do such acts, deeds and things as may be necessary to give effect to the Boards decision
8. Obtain the declaration from the appointed Director regarding his interest in other entities in Form MBP.1 within 30 days of appointment or at the first Board Meeting in which he participates as Director, whichever is earlier. (Section 184(1) read with Section 189(2) of Companies Act, 2013 and Rule 9(1) of Companies (Meetings of Board and its Powers) Rules, 2014 .
9. File a return containing the particulars of appointment of director, with the Registrar in E-Form No. DIR-12 along with such fee as may be provided in the Companies (Registration Offices and Fees) Rules, 2014 within 30 days of such appointment. [Section 170(2) and Rule 18 of Companies (Appointment and Qualification of Directors) Rules, 2014]
Following details/documents are required for filing Form No. DIR-12:-
(a) Details of interest in other entities.
(b) Extract of the Board Resolution for Appointment;
(c) Consent of the appointee director in Form No. DIR-2, along with self-attested copy of ID & Address Proof
(d) Letter of appointment.
(e) Any other document as may be applicable and/or prescribed.
10. Obtain the following details from the Director for making entries in Register of Register of directors and key managerial personnel and their shareholding:
(a) Director Identification Number;
(b) present name and surname in full;
(c) any former name or surname in full;
(d) fathers name, mothers name and spouses name(if married) and surnames in full;
(e) date of birth;
(f) residential address (present as well as permanent);
(g) nationality (including the nationality of origin, if different);
(i) office of director or key managerial personnel held or relinquished in any other body corporate;
(m) the details of securities held by him in the company, its holding company, subsidiaries, subsidiaries of the companys holding company and associate companies relating to-
(i) the number, description and nominal value of securities;
(ii) the date of acquisition and the price or other consideration paid;
(iii) date of disposal and price and other consideration received;
11. Make necessary entries in the Register of directors and key managerial personnel and their shareholding [Section 170(1) and Rule 17 of Companies (Appointment and Qualification of Directors) Rules, 2014 ]
12. Obtain the declaration of independence from the director, in case of the independent director. (Section 149(7))
13. After appointment, the appointed director shall inform other companies in which he is a director, in Form MBP.1, about his appointment.(Section 184(1) of Companies Act, 2013)
14. Prepare and circulate draft minutes of the meeting within 15 days from the date of the conclusion of the board Meeting, by hand/speed post/registered post/courier/e-mail to all the Directors for their comments. . Follow the procedure prescribed for preparing, circulation, signing and compiling of Board Minutes.
15. Inform all concerned persons/ govt. authorities about the appointment of Director like Central Excise Authorities, Customs Authorities, Sales Tax Authorities, Service tax Department, Chief Inspector of Factories, and Regional Provident Fund Commissioner etc.