RETIREMENT BY ROTATION
Section 152(6) of the companies act, 2013 is applicable only on public company, according to it – 2/3 of the total directors in a co. is liable to retire by rotation and those directors are called as Retiring directors, out of the retiring directors (2/3rd of Total number of directors) 1/3rd of directors is liable to leave the office in every year.
How to calculate the total directors
All the directors in the company xxx
Less: Nominee director appointed by central govt and third party xxx
Additional director xxx
Alternate director xxx
Independent director xxx
Total number of directors on whom provision of retirement by rotation may apply (excluding small shareholders director, that is, small shareholder’s director will always be a non-rotational director but will be counted for 2/3rd portion): xxx (A)
2/3rd of above number to be calculated, they are known as Retiring directors (B) = 2/3rd of (A)
Once the retiring directors are known we have to calculate the directors to actually retire from the office in the year it is as follow:
1/3 of (B): They are the ones who will retire from service in the year.
It states that unless it is provided by the articles of the company, 2/3rd directors are liable to retire by rotation and 1/3rd of that 2/3rd are liable to retire at every general meeting after the meeting at which first directors are appointed.
Any fraction in 2/3rd will be rounded off to the next number. Any fraction in 1/3rd will also be rounded off to the next number.
The retiring directors can be re-appointed by shareholders. Further, Independent directors and Nominee directors are excluded from the calculation of 2/3rd. A small shareholder director will be a non-rotational direction, He will be counted in 2/3rd but cannot be retired by rotation.
1/3rd directors which are liable to retire at AGM will be decided by First In First Out method. The one who is longest in the office will be retired first. If 2 or more directors are appointed on same day, then it will be decided by lottery.
