We all have heard about the Mr. Manager of a company. A Manager is a person who manages or is in charge of something. Managers can control departments in companies, or guide the people who work for them. Managers must often make decisions about things.

The manager is responsible for overseeing and leading the work of a group of people in many instances. The manager is also responsible for planning and maintaining work systems, procedures, and policies that enable and encourage the optimum performance of its people and other resources within a business unit.

As they have such important role in a company, their appointment is covered under the Companies Act, 2013. Lets us take a deep dive into that.

Appointment of Manager under the Companies Act, 2013

1. Who is Manager?

As per the Companies Act, 2013 Manager means an individual who, subject to the superintendence, control and direction of the Board of Directors, has the management of the whole, or substantially the whole, of the affairs of a company, and includes a director or any other person occupying the position of a manager, by whatever name called, whether under a contract of service or not.

2. Why are they appointed in a company?

A manager is a person responsible for supervising and motivating employees and for directing the progress of an organization/ Company. Every company grow when their employees performs good and employees performs best when they are managed by a Manager. They are that link between Top management’s route map to workers who are responsible for execution.

Different Countries have their different definition and powers lying there is no universal roles defined for Managers and different qualification to criteria for eligibility.

3. Which companies are required to appoint a Manager?

As per section 203 of the Companies Act, 2013 a manager is considered as Key managerial Personnel. And below given companies are required to appoint a Manager: –

1. Every listed company

2. every other public company having a paid-up share capital of ten crore rupees or more.

4. What laws governs the appointment of Manager?

The appointment and other related provisions for appointment of Manager are:-

1. The Companies Act, 2013

2. SEBI (Listing Obligations and Disclosure requirements) Regulations, 2015.

5. Is Manager is considered as Key managerial personal (KMP)?

As per the Companies Act, 2013, Every listed company and every other public company having a paid-up share capital of ten crore rupees or more are required to appoint Manager as Key Managerial personnel.

As per interpretation if any company not falling in above category or ambit, a Manager are not required to appointed. Though, a company can voluntary comply with this provision.

Note that a Manager who is appointed as key managerial personnel shall not hold office in more than one company except in its subsidiary company at the same time except, Manager can be appointed as Director in any other company after taking permission from the Board of company where they are appointed as Manager.

6. For how long a Manager can serve in a company?

A Manager can be appointed for a maximum five (5) years on one term as per The Companies Act, 2013.

Note that they can be reappointed in a company again but not before one year from the expiry of their five (5) year term.

Interpretation: – Mr. X is appointed as Manager in a Annual General Meeting held on 29th September, 2019 for a term of five (5) years. Now, Mr. X can be re-appointed as Manager on and after 28th September, 2023 though his term would officially expire on 28th September, 2024.

7. What is the process to appoint a Manager?

The following process is followed for appointment of Manager: –

1. Prepare notice of board meeting along with draft resolution(s) to be passed in the board meeting for candidate consideration for appointment as Manager.

2. Sending of Notice along with Agenda of Board meeting to all the Directors of company.

3. Convene board meeting and pass the following Board Resolution.

4. Sending of Outcome of Board Meeting to Stock exchange wherever company’s securities are listed within 30 minutes from the conclusion of meeting. (this point is applicable for listed companies only)

5. Issue letter of appointment to the candidate for their appointment as Manager.

6. File e-Form DIR-12 along with attachments with the Registrar of Companies regarding appointment of director and simultaneously as a Manager within thirty (30) days from appointment as Manager.

7. File e-form MGT-14 for board resolution along with attachments with the Registrar of Companies regarding appointment or variation in terms of appointment of Manager within thirty (30) days from passing of resolution.

8. Prepare Annual General Meeting/ Extra Ordinary General Meeting notice for taking approval from member for appointment of Manager.

9. Convening and passing of ordinary resolution for appointment of Manager in Annual General Meeting/ Extra Ordinary General Meeting as the case may be.

10. Sending of Appointment letter to Manager and entry in register minutes, etc of company.

Also note that, a company can directly appoint a person as Manager in ensuing General Meeting. In that case the procedure will start from point (h) given in above procedure.

8. What are the forms to appoint a Manager in a company?

Only three forms are required for appointment of Manager and these are:-

1. MGT-14 within thirty (30) days

2. DIR-12 within thirty (30) days

3. MR-1 within sixty (60) days

9. What if Manager resigns from the company?

There are many times when a situation arises that a Manager wants to resign from the company, whatever the reason maybe.

If a Manager resigns, she/he can anytime resign from the company after giving a notice as well as reason. The company will take the required steps for such resignation.

It should be noted that the resulting vacancy shall be filled-up by the Board at a meeting of the Board within a period of six months from the date of such vacancy.

10.What are the documents required for appointment of Manager?

The following documents are required: –

1. Intimation letter to stock exchange

2. Copy of Board Resolution for Board Meeting

3. Copy of resolution passed in general meeting

4. Appointment letter

5. Any other as required.

11. What if company fails to appoint a Manager?

Any company which is mandatorily required to appoint a Manager if don’t appoint, such company shall be liable to a penalty of five lakh rupees and every director and key managerial personnel of the company who is in default shall be liable to a penalty of fifty thousand rupees and where the default is a continuing one, with a further penalty of one thousand rupees for each day after the first during which such default continues but not exceeding five lakh rupees.

Disclaimer: – The above article is prepared keeping in mind all the important and basic question as well as provision of section 196 and 204 of the Companies Act, 2013 which comes in mind of a professional or other stakeholder while company doing appointing a Manager in a company. The author has tried to cover all the important and basic question. Under no circumstance, the author shall not liable for any direct, indirect, special or incidental damage resulting from, arising out of or in connection with the use of the information.

(The Author is Corporate Consultant and provides varied array of services including Start-ups mentor, Secretarial, Legal, Trademark, taxation, Audit, GST, Book keeping and other ancillary advisory service in Delhi, Chandigarh as well as The National Capital Region (NCR) and can be contacted through email id:- [email protected] and Contact Number: 91-8178515005)

Author Bio

Qualification: CS
Company: Proventure- Aiding your Business
Location: NEW DELHI, New Delhi, IN
Member Since: 06 Jul 2019 | Total Posts: 64
I am Company Secretary and engaged with this profession from last nine (9) years. Throughout this journey, my moto is to help people start their startups and business. View Full Profile

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September 2021