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CMA Intermediate · Business Laws and Ethics · Directors - Role, Responsibilities, Qualification, Appointment, Removal, Remuneration and Powers

Ramesh, aged 72, is proposed as a whole-time director of Kaveri Industries Ltd. Which statement is correct under Section 196(3)?

Ramesh can be appointed if the company passes a special resolution and the explanatory statement to the notice indicates the justification for appointing him. Section 196(3) bars persons aged seventy or above, but the first proviso permits this route.

  1. AHe cannot be appointed under any circumstances
  2. BHe can be appointed only if the company passes a special resolution, with the explanatory statement giving the justificationCorrect
  3. CHe can be appointed by a simple Board resolution alone
  4. DHe can be appointed only if he has been a director for ten years

Explanation

Section 196(3)(a) bars a person aged seventy or more, but the proviso allows appointment by a special resolution whose explanatory statement justifies it. A Board resolution alone is not enough, and no ten-year condition exists in the text. So the absolute bar option is wrong.

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