Appointment of Key Managerial Personnel | Section 203 read with Companies (Appointment and Remuneration of Key Managerial Personnel) Rules, 2014
Please find attached the article on appointment of Key Managerial Personnel. Please check the content in web layout version in MS word to see the diagrams properly.
Key managerial personnel (KMP) is appointed to supervise the day-to-day operations of the company. Their appointment procedures are discussed under Section 203 read with Rule 8 & Rule 8A of the Companies (Appointment and Remuneration of Key Managerial Personnel) Rules, 2014. According to Section 203(2), a KMP can be appointed by a board resolution containing the terms of appointment including their remuneration. Further, if the office of KMP is vacated, such vacation shall be filled up within 6 months of such vacancy by constituting a board meeting.
The term ‘Key Managerial Personnel’ is legally defined under Section 2(51) of the Companies Act, 2013.
|KEY MANAGERIAL PERSONNEL MEANS:
1. Chief Executive Officer or Managing Director or Manager,
2. Company Secretary,
3. Whole Time Director
4. Chief Financial Officer,
5. Such other officer not more than 1 level below the directors in whole time employment & designated as KMP by Board.
6. Such other officer as may be prescribed
Appointment of KMP – Section 203(1)
Prescribed Companies under Section 203 (Rule 8 & Rule 8A)
Can a whole time KMP hold office in more than one company at the same time?
No, a whole time KMP can never hold office in more than one company at the same time except in the subsidiary of that company. In case, a person has held offices in whole time employment in two companies at the time of the enactment of the Companies act, 2013 then, the person has to choose one company in which he shall hold office within 6 months of the commencement of the act. However, a company can be a director of other companies with the permission of the Board. Further, the MD of one company can become the MD of another company subject to the consent of all the directors present in the meeting by passing a Board resolution. Prior to that, the company shall send specific notice to all the directors present in India regarding the meeting.
Can an individual be appointed as chairperson and MD or CEO of the company at the same time?
No, an individual be appointed as chairperson and MD or CEO of the company at the same time unless under certain circumstances.
Procedure for appointment of KMP
Disclosures to stock exchanges by the listed entity under SEBI Regulations.
|DISCLOSURES TO STOCK EXCHANGE – Regulation 30 of SEBI(LODR) Regulations, 2015
1. Appointment of KMP in the company.
2. Changes in KMP made by the company.
3. Fraud/ Default committed by the company/ KMP.
4. If KMP is arrested.
The above mentioned provisions are not applicable to the CEO or MD or Manager of the government company.