According to Section 2(51) of the Companies Act 2013, Key Managerial Personnel in a Company are:
-Chief executive Officer (CEO) OR the Managing Director.
-Chief Financial Officer (CFO).
-Company Secretary (CS).
These are a group of people who are in charge of managing the operations of a Company; they are responsible for the planning, directing and controlling the functioning of a Company. They are the first point of contract between the company and its Stakeholders.
According to section 203(1) read with Rule 8 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 the following companies are mandated to appoint a Whole-time KMP:
The Management function of implementing important decisions comes under the responsibilities of Key Managerial Personnel. Here are some of the main Roles and Responsibilities of KMP:
Section 196(3) of companies Act,2013 sates that a Company shall not appoint or continue the employment of a Managing Director, Whole-Time Director or Manager if such person:
Section 2(54) of the Companies Act,2013 defines Managing Director as a Director who is responsible for substantial powers of the management of the company and its affairs and is appointed by an agreement or a resolution passed in its General Meeting.
Whole-Time Director of a Company is defined under Section 2(94) of the Act which means a director in whole-time employment of the Company.
Manager as defined under Section 2(53) of Companies Act, 2013 is any individual who works under the control and direction of the Board of Directors and is entrusted with the management of whole the affairs of the Company.
A manager is appointed by the Board of Directors at a meeting which shall be subject to resolution to be passed at the next general meeting of the company. The resolution consists of terms and conditions for the appointment and remuneration to be paid to the manager which has to be initially approved by the Board of Directors.
Any act done by the manager before the approval of the Board of Directors and passing of resolution shall be deemed to be invalid.
A Company Secretary or Secretary under Section 2(24) of the Act whose function is to report the Board about the compliance of the provisions of the Act and other rules in relation to this Act. It also ensures that whether or not the company is complying with the secretarial standards.
The Central Government under Clause (c) of Section 205 has prescribed the role of company secretary in a company. He/she has to ensure the following things:
Chief Financial Officer under Section 2 (19) of Companies Act,2013 is a person who leads the finance and treasury functions of a business enterprise is designated as “CFO”,a CFO of the company should be the person who us appointed as CFO and not engaged in any other manner (retainer or consultant) or by any other designation.
Chief Executive officer under Section 2(18) of Companies Act, 2013 is a person appointed as Chief Executive Officer of a Company.
According to section 2(60) of the Act, an ‘officer who is in default ‘shall be liable for any penalty or punishment by way of imprisonment or fine. The officers may include:
Every Company falling under this provision is required to maintain a register comprising particulars of its Directors and KMPs, which is to be placed at the registered office of the Company. The documents should include the details of securities held by each of them in the company or its holding, subsidiary, subsidiary of a company’s holding company or associate companies. Further requirements of its contents have been mentioned in Rule 17 of the Companies (Appointment and Qualification of Directors) Rules, 2014.
If during the course of business, any Key Managerial Personnel resign from a company, the Company shall be filled up by the board at a meeting of the Board within a period of six (6) months from the date of such vacancy.
A Whole-time Key Managerial Personnel shall not hold office in more than one company except in its subsidiary company at the same time.
Key Managerial Personnel can be appointed as a director of any company with the permission of the Board.
Disclaimer:The entire contents of this document have been prepared on the basis of relevant provisions and as per the information existing at the time of the preparation. Although care has been taken to ensure the accuracy, completeness and reliability of the information provided, I assume no responsibility therefore. Users of this information are expected to refer to the relevant existing provisions of applicable Laws. The user of the information agrees that the information is not a professional advice and is subject to change without notice. I assume no responsibility for the consequences of use of such information. IN NO EVENT SHALL I SHALL BE LIABLE FOR ANY DIRECT, INDIRECT, SPECIAL OR INCIDENTAL DAMAGE RESULTING FROM, ARISING OUT OF OR IN CONNECTION WITH THE USE OF THE INFORMATION.
Author- CS Aakansha Negi and can be contacted at [email protected]