Role and Appointment of Alternate Directors in Company Law
- Definition and Purpose: An alternate director is appointed by the Board of Directors to act as a substitute for a director who is absent from India for a period of at least three months.
- Conditions for Appointment: An alternate director can only be appointed when a director is absent from India for three months or more. Other reasons for director absence do not qualify.
- Authority to Appoint: The Board of Directors has the power to appoint alternate directors either through authorization in the Articles of Association or by passing a resolution in a general meeting.
- Participation in Meetings: Alternate directors, along with the original directors, are entitled to receive notices of board meetings and may participate in them. However, both the original and alternate directors cannot attend the same meeting.
- Limitations on Authority: An alternate director cannot act on behalf of multiple directors and cannot be part of the company’s current board members.
- Tenure: The tenure of an alternate director ends when the original director returns to the country, after a minimum period of three months. Additionally, an alternate director cannot maintain their position if the original director suddenly resigns.
- Number of Directors: The appointment of alternate directors is subject to the total number of directors allowed in the company, which should not exceed 15 as per the 2013 Act.
- Appointment Process: Alternate directors can be appointed through circulation or a physical/board meeting, as there are no specific prohibitions for appointment via circulation.
Understanding the role and appointment process of alternate directors is crucial for ensuring smooth governance and decision-making in a company, especially in cases of director absence from the country.
