Casual Vacancy

A casual vacancy is the office of a director falling vacant before the normal expiry of their term — typically through death, resignation, disqualification, insolvency or removal. Under Section 161(4) of the Companies Act, 2013, where the vacancy relates to a director originally appointed by the shareholders in general meeting, the Board of Directors may fill it at a Board meeting, subject to the company's articles. It is a stop-gap mechanism to keep the board functional between general meetings.

Legal basis

The provision sits in Section 161(4). After the Companies (Amendment) Act, 2017 (effective 9 February 2018) removed the words "in the case of a public company", the sub-section now applies to both public and private companies where the articles so permit. The same amendment added that the Board's appointment must be approved by members at the immediate next general meeting.

How the appointment works

• Only a vacancy in the office of a director appointed by the members can be a casual vacancy — not one caused by an additional, alternate or nominee director stepping aside.
• The Board passes a resolution at a duly convened meeting; a director filed in casual vacancy cannot be appointed by circulation.
• Per the proviso, the new director holds office only up to the date the vacating director would have held office had the seat not fallen vacant — that is, they inherit the remaining term, not merely up to the next AGM.

Listed companies

For a casual vacancy in an independent director's seat, SEBI (LODR) Regulation 25(6) requires the listed entity to appoint a replacement at the earliest, and no later than the immediate next Board meeting or three months from the date of the vacancy, whichever is later.