Sec. 270 of the Companies Act,1956.
Sabir Bavani
(Querist) 28 October 2010
This query is : Resolved
In case of incresing the share qualification amount in the articles, whether the director holding qualification shares at the time of alteration of articles is liable for the increased amount of share qualification or the increased amount applies only to new directors. The reason for this doubt is the judgement cited at the end according to which if at the time of alteration of articles, a director already holds qualification shares, a subsequent increase in amount of share qualification shall not be binding on the director. It seems to be illogical for me as i think that the altered articles apply to the existing directors also. Further, i tried to find the full content of this judgement but failed in that attempt. Kindly, guide me in that respect.
Judgement:- Molineaux v London Birmingham and Manchester Insurance Co. (1902) 2 KB 589 (CA).
Hoping for the earlieast reply.
Thanking u.
Sabir Bavani.
Advocate. Arunagiri
(Expert) 29 October 2010
The amendment in the articles to increase the share qualification will apply to the existing directors when they are getting reelected.
Sabir Bavani
(Querist) 30 October 2010
Thank You sir.
If it is convenient, may i have any reference to any judgement or departmental clarification in this regard.
Thanking U.
Sabir Bavani.
Sabir Bavani
(Querist) 01 November 2010
Pls mention the detail about the relevant judgement / clarification.
Thanking U.
Sabir bavani.
Advocate. Arunagiri
(Expert) 01 November 2010
The law itself makes it very clear that the director to obtain his qualification within two months after his appointment as director if he is not having it on the date of appointment.
So, it is clear the share qualification is the terms of appointment. The company cannot disqualify a person for not acquiring additional share qualification, as per the amendment.
As per the General Clauses act any rule can not be implemented retrospectively.
The share qualification applies to new appointment only. However I am trying to get the clarification and citations.
Sabir Bavani
(Querist) 03 November 2010
Thanks a lot sir. This was really useful to me. Hope for your devotion in any other doubt in future.
Thanking u.
Sabir Bavani.
