Before going into the Section we must know – Who is Key Managerial Personnel under Section 203 of the Companies Act, 2013?
-Managing Director or Chief Executive Officer or Manager and in their absence, a Whole-Time Director
-Company Secretary
-Chief Financial Officer
APPLICABILITY
Following companies shall mandatorily appoint whole time KMP as per Rule 8 of Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014:
1. Listed Entity
2. Public Company having Paid Up Share Capital of Rs 10 Cr or more
As per Rule 8A of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014
Any co., having paid up share capital of Rs. 10 Cr, other than specified in Rule 8 shall appoint whole time Company Secretary
Conditions prescribed under the Section
1. Whole-time KMP shall not hold office in more than one company except its subsidiary.
2. However, he can be a director in any other company with the permission of Board.
3. A company may appoint a person as MD, even if he is a MD or Manager in any other Company, with the permission of all the Directors present in the meeting of the Board.
4. If any vacancy arises then such vacancy shall be filed within 6 months from the date of such vacancy.
5. A Company can’t appoint a person as the Chairperson of the Company as well as MD or CEO, unless the Articles provides so and the Company doesn’t carry multiple businesses.
6. Every Whole time KMP shall be appointed by passing a resolution by the Board of Directors which includes terms & conditions of their appointment and remuneration.
PENALTY
Company should be penalized with Rs. 5,00,000 and every Director and KMP shall be penalized with Rs. 50,000 and if default continues then Rs. 1000 for each day upto Rs. 5,00,000.
ROC FILING COMPLIANCES
1. Every Company shall have to file e-form DIR-12 within 30 days from the date of appointment.
2. Along with DIR-12, every Listed Entity or Public Company shall file e-form MGT-14 within 30 days from the date of appointment
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