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CA Foundation · Business Laws · The Companies Act, 2013

Vikram Seth, a director of Orchid Textiles Ltd, was not present at any Board meeting for 14 months because he was abroad, and he did not take leave of absence from the Board. Which statement correctly describes the position under the Companies Act, 2013?

Vikram's office becomes vacant. Under the Companies Act, a director who absents himself from all Board meetings held during a period of twelve months, with or without leave of absence, vacates office automatically. No special resolution of shareholders is needed for this vacation.

  1. AHis office becomes vacant, since he absented himself from all Board meetings held during 12 months with or without seeking leaveCorrect
  2. BHis office does not become vacant because the Act requires absence for at least 24 months
  3. CHis office becomes vacant only if the shareholders pass a special resolution removing him
  4. DHis office becomes vacant only if he is absent from three consecutive meetings

Explanation

A director's office becomes vacant if he absents himself from all Board meetings held during a period of twelve months, with or without seeking leave of absence. Vikram missed every meeting over 14 months, which covers a twelve-month period. Vacation happens by operation of law and no shareholder resolution is needed.

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