Between The Lines... March 2016

I. Court ruling on executive directors over the age of 70 years

The Bombay High Court has held in the case of Sridhar Sundararajan vs Ultramarine & Pigments Limited that Managing Directors and Whole-time Directors ("EDs") will be deemed to have lost their corner-office jobs if they cross 70 years of age during the tenure of their appointment. Unlike Companies Act, 1956, the new Companies Act 2013 under Section 196(3)(a) prescribes that "no company shall appoint or continue the employment of any person as managing director, whole-time or manager who is below the age of twenty-one years or has attained the age of seventy years."The proviso to Section 196(3)(a) however states that he can be appointed by passing a special resolution and indicating in the explanatory statement the justification for appointment of such person. Thus, such persons who may already have crossed 70 years on or after 1st April 2014 will be disqualified from holding the position of ED.