Section 255 – The Companies Act,1956

The Companies Act, 1956

255. Appointment of directors and proportion of those who are to retire by rotation.

(1) 1[Unless the articles provide for the retirement of all directors at every annual general meeting, not less than two-thirds] of the total number of directors of a public company, or of a private company which is a subsidiary of a public company, shall

(a)be persons whose period of office is liable to determination by retirement of directors by rotation; and

(b)save as otherwise expressly provided in this Act, be appointed by the company in general meeting.

(2) The remaining directors in the case of any such company, and the directors generally in the case of a private company which is not a subsidiary of a public company, shall in default of and subject to any regulations in the articles of the company, also be appointed by the company in general meeting.

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The Act by enacting section 255 shows that it does not disapprove of a person having power to appoint a succession of directors and in the case of a private company, a succession even of all the directors. Such a person would have what has been described as “perpetual management”. It would follow that the Act did not consider this as an evil which required prevention; Oriental Metal Pressing Works (P) Ltd. v. Bhaskar Kashinath Thakoor, 1961 (31) Comp. Cas. 143: AIR 1961 SC 573.

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1. Subs. by Act 65 of 1960, sec. 83, for “Not less than two-thirds” (w.e.f. 28-12-1960).

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The Companies Act, 1956

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