Applicable Provisions: Section 203 of Companies Act of 2013 r/w Rule 8 of Companies (Appointment and Remuneration of Managerial Personnel) Rules of 2014
What they have to Say: Every Listed company and every other public company having a paid-up share capital of Rs. 10 Crore or more shall have whole-time key managerial personnel comprising of:
Managing Director or (CEO or Manager and in their absence, a Whole Time Director), Company Secretary, and Chief Financial Officer (CFO).
Therefore, those private companies and public companies having paid up share capital of less than Rs. 10 Crore are thereby exempted from appointing a KMP. But if we refer to Rule 8A of 2014 Rules, we will get to know that every such company that has a paid-up share capital of Rs. 5 Crore or more are required to have a whole-time company secretary, and here the said CS won’t be termed as a KMP.
If the office of such whole time KMP is vacated, the same has to be filled at the board meeting within a maximum period of 6 months from the date of such vacancy having arose.
With regard to penal provisions, if any company makes any default in complying with the provisions of this section, such company shall be liable to a penalty of Rs. 5 Lakhs and every director and key managerial personnel of the company who is in default shall be liable to a penalty of Rs. 50,000 and where the default is a continuing one, with a further penalty of Rs. 1000 for each day after the first during which such default continues but not exceeding Rs. 5 Lakhs.
Procedure for appointing KMP is given below:
1. Hold the Board meeting and pass the Board resolution containing the terms and conditions of the appointment of key managerial personnel.
2. A company may appoint or employ a person as its managing director, if he is the managing director or manager of one, and of not more than one, other company and such appointment or employment is made or approved by a resolution passed at a meeting of the Board with the consent of all the directors present at the meeting and of which meeting, and of the resolution to be moved thereat, specific notice has been given to all the directors then in India.
3. A whole time Key Managerial Personnel shall not hold office in more than one company except in its subsidiary at the same time
4. On vacation of the office of a whole time Key Managerial Personnel, the resulting vacancy shall be filled-up by the Board at a meeting of the Board within a period of 6 months.
5. File with the Registrar the Form MGT-14 and a return of appointment of a managing director, whole time director or manager in Form MR-1 (Return of appointment of Managing Director, Whole Time Director and Manager).
6. File DIR-12 (Particulars of appointment of Directors and the Key Managerial Personnel and changes among them) along with the fee prescribed in Companies (Registration of Offices and Fees) Rules, 2014.
Note: The above-mentioned provisions and procedure are Ad Verbatim as per the same given under respective laws and Rules as cited earlier.
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