1. #1
    saideep23578@gmail.com
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    May 2012
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    4

    What is the difference between Section 255 and Section 256 of Companies Act,1956?

    hello
    DIOFFERENCE BETWEEN SEC 255 &256 OF COMPANIES ACT 1956?




  2. #2
    Just Guesss?
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    Jul 2011
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    A.S.Rao Nagar - Hyderabad
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    Re: What is the difference between Section 255 and Section 256 of Companies Act,1956?

    Hello Friend !!


    Section 255 and 256 are applicable only to Public Companies.


    They are also applicable for Private Companies also if they are Subsidiaries of Public Companies.

    Section 255 :

    It states that out of the total strength of the Board of Directors at least 2/3rds shall be directors who are liable to retire by rotation.

    That is, if there are 12 directors as per articles of association, at least 8 of them must be liable to retire by rotation.
    4 directors can be permanent or life time directors if the company wants so.

    The section goes on to provide that all directors i.e those liable to retire by rotation and permanent directors and also directors of Private because not being subsidiaries shall normally be appointed only in the general meeting.

    Exemptions are private companies may appoint directors in their Articles Of Association.

    Section Definition :

    Directors of a private company may be appointed by a single resolution, but it it not so in case of public company where each director is to be appointed by a seperae resolution.

    Section 256 :

    This Section explains about the manner in which the retirement by rotation is to be implemented as follows,

    1/3rd the total directors liable to retire by rotation shall retire ever year.

    Not 1/3rd of all directors but 1/3rd of directors liable to retire by rotation as per section 255.

    This 1/3rd shall be determined by identifying first the number required to retire (rounded to nearst number) and then identifying who are the longest serving in office.

    Equal length of service to be resolved by draw of lots. for e.g if the number of directors liable to retire at this years AGM is 3 and 4 directors are serving from same date, then one shall be eliminated by draw of lots.

    Obviously next year he would be the oldest serving director and automatically be liable for retirement by rotation.

    Section Definition :

    Directors of a private company are not required to retire by rotaion, but in case of public company at least 2/3rd of the directors must retire by rotation at each general meeting.

    Hope this clears up ur mind on 255/256.

    Good Luck !!




  3. #3
    Unregistered

    Re: What is the difference between Section 255 and Section 256 of Companies Act,1956?

    Does sections 255 and 256 apply to independent and non-independent directors?

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