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CS Professional · Compliance Management, Audit and Due Diligence · Due Diligence

Mr. Dutta, a director of Lotus Pharma Ltd, is unable to attend board affairs for a year and executes a document handing over his office to his friend Mr. Kapoor to act in his place. What is the legal position under section 166 of the Companies Act, 2013?

The assignment is void. Section 166(6) states that a director shall not assign his office and any assignment made is void. Board ratification, a one-year limit or silence in the articles cannot validate it, and the director may also face the section 166(7) fine for contravention.

  1. AThe assignment is valid if the board ratifies it
  2. BThe assignment is valid for up to one year
  3. CThe assignment is void, as a director shall not assign his officeCorrect
  4. DThe assignment is valid if the articles are silent on the matter

Explanation

Section 166(6) says a director shall not assign his office and any assignment so made is void. Board ratification, a time limit or silence in the articles cannot validate it. Mr. Dutta also risks the fine under section 166(7) for contravention.

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