Direct answer: Where Companies Act section 160 applies, a non-retiring director candidate ordinarily needs a timely signed notice at the registered office and a ₹1,00,000 deposit, unless the deposit exemption applies. The deposit is refundable if the candidate is elected or obtains more than 25% of total valid votes cast on the resolution. Exactly 25% does not meet the vote-based refund test.
Law checked on 22 October 2026 against Companies Act, 2013, section 160, the ICSI statutory compendium and its class-specific modifications and Rule 13 of the Companies (Appointment and Qualification of Directors) Rules, 2014. The worked cases assume an ordinary public company to which the unmodified section applies; private-company, Section 8, Nidhi, government and specified IFSC modifications are outside those examples.
Separate eligibility, notice and deposit
Section 160 concerns a person who is not a retiring director in terms of section 152. It remains subject to the Act’s other appointment conditions. Paying the deposit does not establish DIN status, consent, absence of disqualification, eligibility for an independent role or the required shareholder approval. Keep that broader appointment review separate from the candidature-intake record.
The signed notice can signify the person’s own candidature or a member’s intention to propose that person. It must reach the registered office not less than fourteen days before the meeting. Record actual receipt, the proposing member’s details where relevant and any deposit evidence. A later scan in a meeting folder is not proof of timely delivery.
The statutory deposit exemption has distinct routes
The section’s proviso removes the deposit requirement for an independent director, a director recommended by the nomination and remuneration committee constituted under section 178(1), or a director recommended by the board where the company is not required to constitute that committee. The board route should not be detached from its stated condition.
Retain the committee or board recommendation and explain which limb applies. A management recommendation, or an intention to recommend later, should not be substituted for the actual statutory facts. The deposit exemption does not by its own wording eliminate the candidature notice or the company’s obligation to inform members.
Use valid votes cast as the refund denominator
The percentage test is for total valid votes cast on the particular resolution, not issued share capital, total eligible voting rights, shareholder headcount on a poll, or every ballot submitted. Start with the scrutiniser’s validated result. Exclude invalid votes from the denominator and do not add abstentions as if they were votes cast.
Calculate the threshold without rounding a borderline percentage upward. For integer votes, the minimum number above 25% is the whole number immediately above one-quarter of the valid total. Election is a separate refund trigger: where the person is validly elected, the company need not use the 25% limb as an additional condition. Conversely, passing 25% is not itself an appointment approval.
Inform members and close the deposit ledger
Rule 13 requires the company to inform members at least seven days before the general meeting through the prescribed communications and website posting where it has a website. The rule provides a newspaper-advertisement alternative to individual service with its specified vernacular and English publication conditions. Do not treat receipt at the registered office as completion of member communication.
Maintain a deposit ledger showing the actual remitter, candidature, receipt and refund outcome. Do not credit a potentially refundable deposit immediately to miscellaneous income. If neither statutory refund trigger is met, record that conclusion and review the applicable legal and accounting treatment rather than inventing a universal refund deadline, interest entitlement or forfeiture procedure from this section alone.
The following calculations assume a ₹1,00,000 applicable ordinary deposit and an otherwise valid candidature. Date examples use an intentionally conservative interval with fourteen complete intervening days rather than claiming to resolve every last-day or service-mode dispute. Meeting notices, listing obligations and filing requirements need their own timeline.
Worked illustrations
These illustrations use fictional facts and expressly stated assumptions. Amounts are Indian rupees unless a different currency or unit is specified. They are independent examples, not findings about any actual client.
Illustrative example 1: Exactly one quarter is insufficient
A candidate is not elected. Total valid votes cast are 10,000 and votes in favour 2,500. The proportion is 2,500 ÷ 10,000 = 25%. Because the section requires more than 25%, the vote-based ₹1,00,000 refund trigger is not met. Do not round or relabel the result as above the threshold.
Illustrative example 2: One additional valid vote crosses that threshold
In an independent case, an unelected candidate obtains 2,501 votes out of 10,000 valid votes. This is 25.01%, so the vote-based refund condition is met and the ₹1,00,000 deposit is refundable to the relevant depositor. The result does not by itself mean the candidate was appointed.
Illustrative example 3: Remove invalid ballots from the denominator
Submitted votes total 10,000, but 400 are invalid. Valid votes are 9,600 and the unelected candidate has 2,401 votes in favour. One quarter of valid votes is 2,400, so 2,401 is more than 25%; the refund trigger is met. Using submitted votes would show 24.01% and reach the wrong outcome.
Illustrative example 4: A successful election is a separate trigger
An ordinary candidate deposits ₹1,00,000 and is validly elected on the resolution. The full ₹1,00,000 is refundable under the election limb; the company should not retain ₹25,000 by misreading the 25% test as a partial refund percentage. Refund is the deposit amount, not one-quarter of it.
Illustrative example 5: A qualifying NRC recommendation removes the deposit
The company is required to have an NRC and that committee properly recommends the director. Assuming the statutory proviso applies, deposit required is nil rather than ₹1,00,000, a difference of ₹1,00,000. Retain the recommendation and complete the otherwise applicable notice and appointment steps.
Illustrative example 6: Plan notice receipt and member communication separately
A general meeting is on 30 November 2026. Signed candidature notice and any required deposit reach the registered office on 15 November: there are fourteen complete intervening days, 16–29 November. The company completes the applicable Rule 13 communications on 22 November, leaving seven complete intervening days, 23–29 November. These deliberately buffered dates meet the respective minimum intervals on the stated unchanged-law assumption.
Ten-step verification table
| Step | Verification | Evidence to retain |
|---|---|---|
| 1 | Confirm company-class applicability and modifications. | Company status, notifications and articles review. |
| 2 | Identify whether the person is a non-retiring director candidate. | Section 152/160 appointment analysis. |
| 3 | Complete the independent appointment-eligibility review. | DIN, consent, qualification and disqualification records. |
| 4 | Obtain and timestamp the signed notice at the registered office. | Original notice, proposer details and receipt evidence. |
| 5 | Identify the applicable deposit or a documented exemption limb. | Deposit receipt, NRC recommendation or qualifying board record. |
| 6 | Build a candidature and member-communication timeline. | Meeting date, buffer calculation and communication plan. |
| 7 | Complete Rule 13 communications and website posting as applicable. | Service records, website archive or qualifying advertisements. |
| 8 | Reconcile submitted, invalid and valid votes for the resolution. | Scrutiniser report and validated voting records. |
| 9 | Apply the separate election and strict more-than-25% refund triggers. | Unrounded fraction calculation and appointment result. |
| 10 | Settle and reconcile the deposit with the correct remitter. | Refund evidence, ledger and documented outcome. |
Sixteen practitioner FAQs
1. Does section 160 apply to every director appointment?
First identify the non-retiring candidature and company class. Other appointment routes and statutory modifications need separate analysis.
2. Can the candidate give the notice personally?
The section permits the candidate’s signed candidature notice or a member’s signed proposal of that candidate.
3. Where must the notice be left?
At the company’s registered office within the required interval; retain actual receipt evidence.
4. What is the ordinary notice interval?
Not less than fourteen days before the meeting under section 160. Build a service-aware calendar and allow a practical buffer.
5. Is the ordinary deposit ₹10,000?
The unmodified section uses ₹1,00,000, subject to any prescribed higher amount. Special company-class modifications must be assessed separately.
6. Does an independent director require this deposit?
The statutory proviso exempts the deposit in that appointment case, while other applicable requirements remain relevant.
7. Does an NRC recommendation remove the deposit?
The proviso covers a director recommended by the section 178(1) NRC. Retain the actual recommendation.
8. Can any board recommendation use the board exemption?
The board limb is tied to a company not required to constitute the NRC. Do not remove that condition from the analysis.
9. Does deposit exemption dispense with the signed notice?
The proviso addresses the deposit requirement; it should not be treated as a general deletion of the other steps.
10. Is exactly 25% enough for a vote-based refund?
No. The statutory wording requires more than 25% of total valid votes cast on that resolution.
11. Should invalid votes be counted in the denominator?
No. Reconcile to the validated valid-votes-cast total, not merely all submitted votes.
12. Do abstentions add to votes cast?
Do not treat an abstention as a valid vote cast in the percentage denominator.
13. Does passing the refund threshold mean the person is elected?
No. Refund eligibility and the approval needed for appointment are distinct tests.
14. Must an elected candidate also satisfy the 25% limb?
Election is itself a statutory refund trigger, subject to the appointment being valid.
15. What is the separate Rule 13 interval?
At least seven days before the general meeting for the prescribed member information, including the applicable website requirement.
16. Does section 160 prescribe a universal refund-interest calculation here?
Do not invent one. Record the statutory refund outcome and assess any additional governing requirement on its own authority.
Working-paper organisation
Keep the source documents, calculation and final conclusion together for the same entity and period. If using assurePractice or other assureOffice tools, use only confirmed available functions and retain this evidence with the output.
Conclusion
Confirm applicability before collecting a deposit, keep the notice and communication clocks separate, and decide refunds from the validated election result and exact valid-vote fraction.