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CMA Final · Corporate and Economic Laws · Board of Directors and Key Managerial Personnel

Sagar Textiles Ltd, a company required to have whole-time KMP, sees its Chief Financial Officer resign with effect from 1 July. Under Section 203, which statement about filling this vacancy is correct?

The vacancy in a whole-time KMP office such as the CFO must be filled by the Board at a Board meeting within six months from the date the vacancy arose, as Section 203(4) provides. Members do not fill it, and there is no wait for the AGM.

  1. AThe Board must fill it at a Board meeting within six months from the date of the vacancyCorrect
  2. BThe members must fill it by ordinary resolution within three months of the vacancy
  3. CThe Board must fill it by circulation within thirty days of the vacancy
  4. DThe vacancy need not be filled until the next annual general meeting

Explanation

Section 203(4) states that when a whole-time KMP office is vacated, the Board shall fill the vacancy at a meeting of the Board within six months from the date of the vacancy. The option giving the task to members is wrong because appointment is by Board resolution. The thirty-day period and the wait for the AGM have no basis in the section.

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