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Tuesday, January 8, 2008

Registrar of Companies

Thus, based on the above provisions, it can be concluded that the members contention in this case shall not be tenable, as under (a) above, J is not required to file his consent to act as director with the Registrar of Companies. J has, therefore, not violated any of the provisions of the Act.
The answer in the second case would also be the same as it is covered under © above. Hence J is not required to file his consent to act as director on his re-appointment with the Registrar of Companies.
After serious disagreement and difference of opinion among the shareholders of the company in the last annual general meeting, some of the directors took the steps as noted below. Discuss the validity and effect of the following:
(i) Mr. John, the managing director sends his notice of resignation.
(ii) Mr. Paul, an ordinary director verbally resigns and not in writing.
(iii) Mr. David, another ordinary director, had sent his resignation, but withdrew it
before the Soard meeting was held for accepting his resignation.
(i) Mr. John, the managing director cannot resign merely by giving a notice. In his case a formal acceptance of resignation by the company is essential so as to make it complete and effective. This is because he occupies two positions or possesses two capacities, viz., one that of a director, and the other that of manager or officer of the company in the sense of a whole time employee.
An employee cannot give up office at his pleasure simply by giving notice. The notice or the letter of resignation is required to be approved or accepted by the company and the officer concerned has to be relieved of his duties and responsibilities attached to the office which he has resigned from. (Achutha Pal (v) Registrar of Companies (1956) 36 Camp.
(ii) A director can resign from his office in the manner laid down in the Articles of the company. Where Articles do not contain any provision in this regard, a director may still resign at any time by giving a reasonable notice to the company. In Latchford premier Cinema vs. Ennion it was held that a verbal notice accepted at a meeting is sufficient, even if the articles provide for resignation in writing.
Thus,rrbal resignation cannot be held valid unless accepted at a meeting of the
Board/Shareholders.
Even written notice of resignation to be valid must be addressed to the company
t to any third party.
( iii) Once a director has given a notice of resignation, he cannot withdraw it except w the consent of the company properly considered by the directors. It makes no difference that the withdrawal is sought before the Board’s meeting. However, where articles provide that a director may resign only if the Board consents, the resignation shall not be effective until the Board’s consent is given and the resignation may be
withdrawn in the meantime.
With reference to the provisions of the Companies Act, 1956, examine the validity of the following:
(a) Appointment of Mr. Salak, a minor, as a Director of MRN (Pvt.) Ltd.
(b) Mr. Smart was appointed as the Managing Director of a public limited company
for a period of 5 years effective from 1.4.1993. It is noticed that he performed certain acts on behalf of the company in which he was appointed after the expiry of his term. Some of the aggrieved parties have questioned the validity
(a) Section 274 deals with disqualification of directors. Section 274(2) permits a private company to provide that a person shall be disqualified for appointment as a director On any groun ls in addition to those specified in sub-section(l). In the case of a minor, though there is nO provision in the Act expressely disqualifying him, as he is not competent to contract, he cannot file either with the company or with the Registrar any valid consent to act as director as required by Section 264. But Section 264 applies .only to public companies and private companies which are their subsidiaries; there is nothing prohibiting a director of other private companies in the absence of any contrary provision in the Articles. Therefore, Mr. Balak may be appointed as a director of MRN (Pvt.) Limited.
(b) Section 290 validates only the acts of a person acting as a director if it was subsequently discovered that his appointment was invalid by reason of any defect or disqualification or was terminated by virtue of any provision contained in the Act or in the Articles. It does not extend to validating the acts of a perspn acting as managing director (M. D.) except as regards his acts, if any, as a director. Further it was held in Varkey Souriar v. Keraleeya Banking Co. Ltd. (1957) 27 CC 591 that where an M. D. ceased to hold office any subsequent act of his would not be valid as it was not an irregular exercise of power, but exercise of power by a person who has nO authority at all.

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