Can Board of a listed company appoint an additional director of over 75 years age as independent director subject to approval of members by special resolution in next AGM?
Board of Directors of the listed company appointed an additional director (who had crossed age of 75 years) as independent director on 16th May 2023 subject to approval of members in AGM by special resolution. Accordingly AGM held on 10th Aug 2023 approved the appointment by special resolution and BSE and NSE were informed. However, both the exchanges levied penalty of Rs.1,08,560/- on the company. It was contended that the company had contravened provisions of Regulation 17(1)(a) of LODR. However no reason was given why and how the company had contravened the said provision. During proceedings it was pointed out that Board could not appoint director prior to getting approval of members since he had crossed age of 75 years.
On appeal, SAT vide order dated 28.11.2023 held that on combined reading of Sections 149, 152(2) and 161 of Companies Act 2013 and Regulations 17(1A) and 17(1C) of LODR make it clear that Board can appoint a person of over 75 years age as independent director subject to approval by members by special resolution within 3 months which was complied with in this case. The word “unless” in Regulation 17(1A) does not mean prior approval. Hence order for levy of penalty was quashed.