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

Mr. Sameer Joshi, a director of Orion Pharma Ltd, is busy with other ventures and executes a deed assigning his office as director to his friend Mr. Dev Nair, who starts attending board meetings. A due diligence reviewer assesses the arrangement. Which conclusion is correct under section 166?

The assignment is void. Section 166(6) forbids a director from assigning his office and declares any such assignment void, so neither board ratification nor silence in the articles can make Mr. Dev Nair's attendance valid in place of the director.

  1. AValid if the articles are silent on assignment
  2. BValid if the board passes a resolution ratifying it
  3. CVoid, because a director shall not assign his office and any assignment is voidCorrect
  4. DValid for a period not exceeding one year

Explanation

Section 166(6) says a director shall not assign his office and any assignment so made shall be void. Board ratification or silence in the articles cannot validate it, and no time-limited assignment is allowed. Section 166(7) fine also applies to the contravening director.

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