Section 152(6) of the Companies Act regulates the appointment and retirement of directors in Indian companies.
The managing director of V-Guard Industries, a manufacturer of home appliances and electrical appliances, has been fined by the Registrar of Companies (RoC) for violating rules and regulations relating to retirement and appointment of directors on the board of directors.
The RoC Ernakulam has imposed a fine of Rs 2.03 lakh on V-Guard Industries Managing Director MK Chittilappilly for violating Section 152(6) of the Companies Act on an application filed by the company on its own initiative.
“The Managing Director has received an adjudication order from RoC, Kerala imposing penalty under Section 159 of the Act for non-compliance with Section 152(6) of the Act,” the company said in a regulatory filing.
Section 152(6) of the Companies Act regulates the appointment and retirement of directors in Indian companies.
All directors are eligible to retire at Annual General Meetings (AGMs). One third of rotating directors must retire each year, but the figure may vary depending on the total number of directors.
However, the RoC in the order passed on August 19 noted that as on April 1, 2022, the board of V-Guard consisted of an optimum number of executive and non-executive directors with more than 50 per cent non-executive independent directors, comprising 2 executive directors and 6 non-executive independent directors.
“Of the two executive directors, one belongs to the promoter category and is designated as General Director, and the other belongs to the professional category under the designation of Director and Director of Operations. The position of General Director is not subject to retirement by rotation,” he said.
Of the remaining 2 directors who were due to retire, the non-independent non-executive director opted not to participate in the re-election offer and retired on the date of the Annual General Meeting, held on 28 July 2022.
“The remaining executive director retired on rotation and was reappointed at the 26th Annual General Meeting, resulting in violation of Section 152 of the Act,” the order said.
Subsequently, in order to comply with the provisions of the Law, V-Guard at its session of May 30, 2023 appointed an Additional Director, who is subject to rotating retirement.
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First published: August 27, 2024 | 10:42 PM IS
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