Sections 162 and 163 of the Companies Act, 2013: Appointment of Directors
Sections 162 and 163 regulate two different methods connected with the appointment of directors. Section 162 generally requires proposed directors to be voted on individually at a general meeting. Section 163 permits a company, through its articles, to provide for proportional representation for appointment of not less than two-thirds of its directors.
Section 162 - Appointment of directors to be voted individually
Meaning: Section 162 is intended to ensure that members ordinarily have a separate voting choice for each proposed director instead of being required to accept or reject several appointments together.
Sub-section (1)
At a general meeting, a motion seeking to appoint two or more persons as directors by a single resolution cannot be moved unless the meeting has first agreed to permit that combined motion and no vote is cast against the proposal.
Sub-section (2)
If a resolution is moved contrary to sub-section (1), the resolution is void. This consequence applies even if nobody objected when the resolution was moved.
Sub-section (3)
A motion approving a person for appointment, or nominating a person for appointment as a director, is treated as a motion for that person's appointment for the purpose of Section 162.
Practical effect of Section 162
- Separate resolutions are the normal rule where multiple directors are proposed for appointment at a general meeting.
- A combined resolution is possible only after the meeting first agrees to that course without any dissenting vote.
- Contravention makes the combined appointment resolution void by operation of Section 162(2).
Section 163 - Proportional representation for appointment of directors
Meaning: Section 163 begins with a non-obstante clause and allows a company's articles to provide a proportional representation system for appointing directors. The mechanism can help voting strength be reflected in board representation instead of every seat necessarily being decided through a conventional majority vote.
The articles may provide for appointment of not less than two-thirds of the total number of directors according to the principle of proportional representation. The Act expressly recognises the single transferable vote, cumulative voting, or another proportional representation method.
Appointments under this mechanism may be made once every three years. Casual vacancies of directors appointed under Section 163 are to be filled in accordance with Section 161(4).
What is proportional representation?
For Section 163, proportional representation is a voting arrangement designed to allocate board representation by reference to voting support. A single transferable vote permits preferences to be transferred in accordance with the voting system adopted, while cumulative voting generally permits voting power to be concentrated among one or more candidates. The company's articles must provide for use of the Section 163 mechanism.
Casual vacancies and Section 161(4)
Section 163 expressly links casual vacancies to Section 161(4). Under the current Section 161(4), where the office of a director appointed by the company in general meeting becomes vacant before the normal expiry of the term, the Board may fill the casual vacancy at a Board meeting, subject to the articles, and the appointment is subsequently to be approved by members at the immediate next general meeting. The appointee holds office only up to the date the original director would otherwise have held office.
Section 162 and Section 163 - key distinction
Section 162 deals with how individual director appointments are put to vote at a general meeting. Section 163, by contrast, gives a company an optional articles-based system of proportional representation for at least two-thirds of the board. They therefore address different aspects of board appointment procedure.
Related provision: removal under Section 169
Section 169 contains an important interaction with Section 163. The ordinary removal mechanism in Section 169(1) does not apply in the same way where the company has exercised the Section 163 option for appointment of not less than two-thirds of its directors according to proportional representation. The applicable statutory text and the company's articles should therefore be checked before acting.
Law checked against the Companies Act, 2013 text available on India Code. Last reviewed: 17 September 2026.