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CS Professional · Environmental, Social and Governance (ESG) - Principles and Practice · Stakeholders Rights

Mr. Iyer, a shareholder of Orbit Foods Ltd (listed), wants to propose Ms. Nair, a non-retiring person, as a director at the AGM but has not deposited one lakh rupees with his notice. The NRC has already recommended Ms. Nair's appointment. What is the effect under section 160 of the Companies Act, 2013?

The deposit requirement does not apply. The proviso to section 160(1) exempts a person recommended by the Nomination and Remuneration Committee from depositing one lakh rupees, so Ms. Nair's candidature is valid without the deposit, subject to the usual fourteen-day notice.

  1. AThe deposit is still mandatory and forfeited if she gets under 25% votes
  2. BThe deposit requirement does not apply because the NRC recommended herCorrect
  3. CThe deposit applies unless she is an independent director
  4. DThe nomination is void because only the Board can propose new directors

Explanation

The proviso to section 160(1) exempts from the deposit an independent director, a director recommended by the NRC, or one recommended by the Board where no NRC is required. Ms. Nair is NRC-recommended, so no deposit is needed. Notice period requirements otherwise continue.

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