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ACCA Applied Skills · Corporate and Business Law (Global) · Company directors

Marlow Co's articles allow the board to appoint a person to fill a casual vacancy until the next annual general meeting, when the person must retire and may offer themselves for re-election. The board appoints Priya to fill a vacancy arising from a director's resignation. What is the legal position of Priya's appointment?

Priya's appointment is valid because the articles give the board power to fill casual vacancies. However, the same articles require her to retire at the next annual general meeting, where she may offer herself for re-election by the members.

  1. AIt is invalid because only members may ever appoint directors
  2. BIt is valid, but Priya must retire at the next annual general meeting and may seek re-electionCorrect
  3. CIt is valid and Priya holds office permanently without any need for re-election
  4. DIt is valid only if all creditors consent in writing

Explanation

Where the articles authorise the board to fill vacancies, the appointment is valid. The articles here also make the appointment temporary until the next AGM, so Priya must retire then and may stand for re-election. Member-only appointment is not required when the articles give the board power.

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