Company Law relating to the Appointment of directors by the central government

Appointment of directors by the central government (Sec. 408)

Sec 408 empowers the central government to appoint such number of directors on the Board as the Tribunal may, by order in writing, specify as necessary to effectively safeguard the interests of the company or its shareholders or the public interest. The appointment will be for a period not exceeding 3 years on any one occasion. The purpose of the appointment is to prevent the affairs of the company from being conducted either in the manner.

· Which is oppressive to any members of the company or

· Which is prejudicial to the interests of the company or to public interest.

The Tribunal may pass the above order on a reference made to it by the central government or on the application.

(i) of not less than 100 members of the company or (ii) of members of the company holding not less than 1/ 10th of the total voting power there in .

Any director appointed by the central government shall not be required to hold any qualification shares nor shall his period of office be liable to termination by retirement of directors by rotation .Any such director may be removed by the central government from his office and another person may be appointed in his place.

Consent of candidate for directorship to be filled with Registrar

A person shall not act as director of a company unless he has, by himself or by his agent authorized in writing, signed and filed with the Registrar, consent in writing to act as such director within 30 days of his appointment. This provision shall not apply to a private company unless it is a subsidiary of a public company.