(i) The board may pass an ordinary resolution for the removal of director in the general meeting. The notice served by the board is special notice for the purpose of appointment of directors. The special notice is only required when the appointment of director is made in the same general meeting.
In the present case where Mr. John is retired and the appointment of Mr. Fred is made in the same meeting, The management of the organization shall be required to present an ordinary resolution proposing the retirement of Mr. John from the office of director and shall also be required to present a special notice specifying the purpose of appointment of Mr. Fred as the new director. Passing of ordinary resolution shall imply the retirement of Mr. John and passing the resolution of the special notice shall effectuate the appointment of Mr. Fred as the new director.
(ii) The board has an exclusive power to appoint new director in three circumstances namely,
• Appointment of Additional Directors in the normal course of operations
• Appointment of Alternate Director in the normal business operations
• Fill Casual Vacancies i.e. if director retires in midterm of business.
When the tenure of office of director comes to an end before the end of normal course of business it is called casual vacancy. The board has the power to appoint a new director only if the retiring director had been appointed through general meeting. The director filling the vacancy would hold the office for the balance period of tenure of office of the retired director.
The board has the power to pass resolution in the general meeting or any circulation in the meeting regarding any affairs to be passed in the board. The board has power to appoint director and also to remove only those directors appointed by them in the general meeting. (McLaughlin, 2013, 4)
In the given case the director Mr. John is retiring in the middle of term thus there is casual vacancy. Thus the director could be appointed in the general meeting by the board. The board will appoint the director by passing a resolution in the board meeting. The new director should be the qualifying director and eligible for appointment. And there should be full consent of the board to appoint Mr. Fred as the new director.