ANALYSE whether the appointments were legally valid in light of the Companies Act, 2013 and relevant rules. (a) The board's appointment of six…

(a) 9 (a) Under Section 149 (1) of the Companies Act, 2013 every company shall have a Board of Directors consisting of individuals as directors and shall have a minimum number of 3 directors in the case of a public company, 2 directors in the case of a private company, and one director in the case of a One Person Company. The maximum number of directors shall be 15. The First Proviso to Section 149 (1) states that a company may appoint more than 15 directors after passing a special resolution. From the provisions of section 149 (1) as above, though the minimum number of directors may vary depending on whether the company is a public, private or an one person company, the maximum number of directors is same for all types of companies i.e. 15 directors subject to Special resolution and Article. Further, the company shall inform its members regarding the candidature of a person for the office of director in accordance with the manner prescribed in Rule 13 of the Companies (Appointment and Qualifications of Directors) Rules, 2014. The same is stated below: At least 7 days before the general meeting, the company shall inform its members of such candidature- 1. By serving individual notices through electronic mode to such members who have provided their e-mail addresses for communication purposes and in writing to all other members; and 2. By placing notice of such candidature on its website, if any. When there is no need to serve notices individually: It shall not be necessary for the company to serve individual notices if it advertises such candidature, not less than 7 days before the meeting: (a) At least once in a vernacular newspaper in the principal vernacular language of the district in which the registered office of the company is situated, and (b) At least once in English in an English-language newspaper circulating in that district. In case an independent director is appointed in the general meeting, an explanatory statement for such appointment annexed to the notice for the general meeting, shall include a statement that in the opinion of the Board, he fulfills the conditions specified in this Act for such an appointment [Proviso to Section 152 (5) ]. Section 149 (4) of the Companies Act, 2013 requires certain classes of companies (notably listed public companies and prescribed unlisted public companies) to appoint independent directors. Private companies are generally not required to appoint independent directors under the Act. However, if a private company voluntarily chooses to appoint any director as an "independent director", then all statutory provisions applicable to independent directors, including eligibility under Section 149 (6) and the requirements of Section 150 and Rule 6 of the Companies (Appointment and Qualification of Directors) Rules, 2014 must be complied with. Section 150 (1) mandates that any individual proposed to be appointed as an independent director must have their name included in the data bank maintained by a notified body or institute (currently the Indian Institute of Corporate Affairs), and must meet the eligibility criteria set out in Section 149 (6) . Rule 6 (1) of the Companies (Appointment and Qualification of Directors) Rules, 2014 (as amended) provides that every individual being appointed as an independent director in any company must apply online to the data bank maintained by the institute, and such appointment is only valid if the individual is so registered at the time of appointment. The appointment of an independent director whether in a public or private company must be approved by the company in a general meeting as provided in Section 152 (2) , and the explanatory statement annexed to the notice for such meeting must specify the justification for choosing the appointee for appointment as an independent director, as per Section 150 (2) . Section 170 (2) , read with Rule 18 of the Companies (Appointment and Qualifications of Directors) Rules, 2014, requires a company to file a return in Form DIR-12 in respect of its directors and key managerial personnel after paying the prescribed fee as under: 1. Within 30 days from the appointment; and 2. Within 30 days of any change taking place. Analysis and conclusion In the given case, Rathvaan Pvt. Ltd. proposed to increase its board from 10 to 16 directors. The company will be required to Alter its Articles of Association as per the provisions of Section 14 of the Act by passing a special resolution, so as to increase the number of directors in the Articles from 12 to 16. Although the special resolution to approve the appointments was passed unanimously at the EGM, but no resolution was passed to amend the Articles. Accordingly, those appointments are invalid. Also, the notice for EGM to be held on April 15, 2025, with notice dated 6th April 2025, was published in vernacular and English newspaper and uploaded on the company's website but not dispatched to members. Since the notice was duly published in vernacular and English newspaper, there is no need to serve notices individually to all members and hence the company has not violated any law in this regard. However, for the two independent director appointments, the notice lacked the mandatory explanatory statement as required by the proviso to Section 152 (5) and Section 150 (2) of the Companies Act, 2013. Although private companies are not required by law to appoint independent directors, if they do so voluntarily, all procedural requirements, including the inclusion of an explanatory statement justifying the appointment, must be complied with. In addition, under Section 150 (1) and Rule 6 of the Companies (Appointment and Qualification of Directors) Rules, 2014, any individual being appointed as an independent director must have their name included in the data bank at the time of appointment. Omission of the explanatory statement and failure to comply with the data bank registration requirements both render the independent director appointments invalid and non-compliant with the Act. Finally, the DIR-12 filings on April 30, 2025 fall within the 30-day filing window under Section 170 (2) and are therefore compliant. Therefore, on the basis of above the appointment of directors is not valid. (b) According to section 161 (4) of the Companies Act, 2013, 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 which shall be subsequently approved by members in the immediate next general meeting. 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. Casual Vacancy is not the vacancy created due to the retirement of a director. It is created because of certain other factors that are not linked with retirement-like occurrence of death or attraction of disqualification or tendering of resignation or removal, etc. A vacancy which was created due to the fact that the elected director declined to assume the office after his appointment at general meeting cannot be said to result in a casual vacancy. In such a case, when there was no assumption of office by the director, how can he vacate it? Thus, there arises no casual vacancy. A director appointed to fill a casual vacancy is not a 'casual director'. He enjoys all the powers as well as is required to bear the responsibilities of the director in whose place he is appointed except that where the earlier director was an 'interested director', his 'interest' cannot be attached to the new director filling the casual vacancy. Analysis and conclusion Further, in this case, the term of the office of director because of which the casual vacancy is created does not get expired in the normal course. In the given question, the casual vacancy caused due to death of Mr. Rishi (who was appointed by the company in AGM held on 30.9.2022, for a period of 3 years) is filled by the Board of Directors by appointing Mr. Ranvir for a period of three years. However, the appointment of Mr. Ranvir for a period of three years is in contravention of above stated provisions as he can hold office only up to the date up to which Mr. Rishi would have held office if it had not been vacated. Further, as per the provisions of the Act, the appointment of Mr. Ranvir ought to be approved by members in the immediate next general meeting. However, the appointment of Mr. Ranvir was not even proposed or approved in the immediate next general meeting held. Hence, the appointment of Mr. Ranvir is in contravention of the provisions of the Companies Act, 2013. Therefore, the opinion of CFO is correct.