Managing Director Section 2(54) of the Companies Act, 2013, defines Managing Director.
‘managing director’ means a director who by virtue of the articles of a company or an agreement with the company or a resolution passed in its general meeting, or by its Board of Directors, is entrusted with substantial powers of management of the affairs of the company and includes a director occupying the position of managing director, by whatever name called.
The explanation to section 2(54) excludes administrative acts of a routine nature when so authorised by the Board such as the power to affix the common seal of the company to any document or to draw and endorse any cheque on the account of the company in any bank or to draw and endorse any negotiable instrument or to sign any certificate of share or to direct registration of transfer of any share, from the substantial powers of management.
Procedure for Appointment of Managing Director
| STEPS | PROCEDURE |
| Step :1
Approval of Board |
Hold Board Meeting
|
| Step : 2
Filling of required forms |
After passing Board Resolution following forms are required to be filed with ROC:
|
| Step:3
Call General Meeting |
Issue Notice for calling General Meeting ,at least 21days before the General meeting |
| Step :4
Approval of Shareholders |
Hold General Meeting
|
| Step :5
Filling of Form |
The Special Resolution passed at General Meeting needs to be filed with ROC within 30days of passing of Resolution. |
NOTES:
1. Forms involved:
- DIR-12: Particulars of Directors and key managerial personnel and the changes among them.
- MGT- 14: Filling of Resolutions and Agreements to the Registrar.
- MR-1: Return of Appointment of MD/WTD to the Registrar.
2. Documents to be provide by the person:
- A declaration that he is not disqualified to become a director under the Act (DIR-8)
- Consent on or before appointment(DIR-2)
- Self attested copy of identity and address proof)
3. Tenure of Managerial Personnel:
Maximum tenure for appointment of Managing Director, Whole Time Director or Manager is 5 years at a time.
4. Exemption is given to only government companies by exemption notification dated 05thJune, 2015.
5. Re-appointment:
Re-appointment may be done for next term but not earlier than one year before expiry of the current term, company may re-appoint them for next term in last one year of current term.
6. Minimum Age:
Minimum age for appointment as MD/WTD/Manager is 21 years.
7. Maximum age for appointment as MD/WTD/Manager is 70 years( But subject to approval of Shareholders in General Meeting a person can be appointed as MD/WTD/Manager even after obtaining age of 70 years.
8. Cessation of Continuation of Appointment of MD/WTD/Manager:
Where a person is below age of 21years or has attained the age of 70years.
Person who is an undercharged insolvent or has at any time been adjudged as an insolvent.
Where a person at any time suspended payment to his creditors or make or has at any time made a composition with them.
Where a person at any time convicted by a court of an offence and sentenced for a period of more than six months.
9. Appointment of Managing Director and Manager at same time:
A private company or public company shall not appoint Managing Director or Manager at the same time.
However whole-time director can be appointed along with appointed Managing Director or Manager.
10. Number of Directorship:
A person shall not hold office as a director in more than 20 companies, including alternate directorship (Section 165 of the Act). The appointee and the company in which he is appointed as Managing Director shall confirm the same.
11. Entry in the Register of Directors and KMP and their Shareholding:
The company shall make necessary entry of the requisite particulars in the register of directors and managerial personnel and their shareholding (under Section 170 of the Act).
Author Bio
There is no information on the number of Managing Directorships allowed under the law. Law is silent on it. please quote any case law on restriction on the number.