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Section 162: Appointment of directors to be voted individually

Companies Act • Official Statutory Text & Practice Guide

Statutory Regulation
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Act 2013
Section 161 All 470 Sections of Companies Act Section 163
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Company Sec 2(20) Director Sec 2(34) Tribunal Sec 2(90)

Legal Commentary & Landmark Judgments: Section 162

Section 162 of the Companies Act, 2013 prohibits the appointment of two or more directors by a single composite resolution at a general meeting without prior unanimous consent, declaring any resolution moved in contravention wholly void.

  • Prohibition of Slate Voting: A motion for the appointment of two or more persons as directors by a single resolution cannot be moved at a general meeting unless a preliminary proposal to move a composite resolution has been unanimously agreed to without any vote cast against it.
  • Absolute Statutory Voidness Ab Initio: Section 162(2) provides that any resolution moved in contravention of subsection (1) is completely void, regardless of whether any objection was raised at the time of moving or voting on the resolution.
  • Protection of Shareholder Choice: Prevents management from bundling unpopular or controversial candidates with popular candidates, thereby protecting the democratic prerogative of shareholders to judge each director individually.
  • Exemptions for Private and Wholly-Owned Government Companies: The prohibition does not apply to private companies (vide MCA Exemption Notification dated June 5, 2015) or government companies where the entire paid-up share capital is held by the Central or State Government.
Key Landmark Precedents:
  • Raghunath Swarup Mathur v. Raghuraj Bahadur, AIR 1967 All 145: The Allahabad High Court held that moving a single composite resolution for the election of multiple directors without prior unanimous agreement renders the entire appointment void ab initio under the mandatory terms of Section 162.
  • Re: Northern Counties Securities Ltd., [1976] 2 All ER 655: Affirmed the foundational company law principle that statutory prohibitions against en bloc director voting are mandatory rules designed to preserve unhindered shareholder franchise.
Courtroom Practice & Strategic Litigation Guidance:

When drafting general meeting agendas and notices for public companies, secretarial counsel must ensure that every proposed director's appointment is set out as a separate, independent ordinary resolution. If management attempts to move an omnibus resolution without first obtaining unanimous approval of a preliminary motion, record an objection in the meeting minutes and file an NCLT petition under Section 241 to have the purported appointments set aside as statutory nullities under Section 162(2).

Section 161 All 470 Sections of Companies Act Section 163