Rotational directors are those directors whose period of office is liable to retire by rotation in every Annual General Meeting (AGM)and eligible for reappointment accordance with the Companies Act, 1994. Rotational directors are also known as retiring directors or temporary directors.
Currently the Articles of Association of companies provide for some or all of the directors to retire automatically by rotation at the company's Annual General Meeting (AGM). In addition the Articles may require, any director who has been appointed by the board to fill a casual vacancy during any given year to retire at the next AGM and stand for re-election.
Reasons for Director Rotation
There are various reasons for rotation of directors, and the process has its advantages and disadvantages.
Director rotation helps develop strong corporate governance practices. Governance involves establishing corporate policies, rules, and resolutions that cover corporate behavior. One of the goals for good corporate governance is to have a transparent process in place that includes a set of rules and controls.