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CA Foundation · Business Laws · The Companies Act, 2013

Lakshmi Foods Ltd, a public company, has a board of 9 directors. Two-thirds of the total directors must be liable to retire by rotation. At the next annual general meeting, how many of the retiring directors must retire by rotation, and what is the rule for those who retire?

One-third of the directors who are liable to retire by rotation must retire at each annual general meeting. Of nine directors, six are liable to retire, so two retire. Retiring directors remain eligible for re-appointment, so the options barring re-appointment are wrong.

  1. AOne-third of the directors liable to retire by rotation must retire, and they are eligible for re-appointmentCorrect
  2. BAll directors liable to retire by rotation must retire, and they cannot be re-appointed
  3. COne-half of the directors liable to retire by rotation must retire, and they cannot be re-appointed
  4. DOne-third of all 9 directors must retire, and they are ineligible for re-appointment

Explanation

At least two-thirds of the directors of a public company must be liable to retire by rotation, which here is 6 of 9. At each annual general meeting one-third of those liable to retire must retire, so 2 directors retire. Retiring directors are eligible for re-appointment, so the options barring re-appointment are incorrect.

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