Section 2(54) of the Companies Act, 2013 provides that “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.
A Managing Director is an ordinary director entrusted with special powers [Newspaper Proprietary Syndicate 1900 2 Ch 349]. According to Palmer, a managing director, in great majority of cases combines the position of director and of employee. [Palmer’s Company Law, 24th Edition] The words ‘substantial powers of management specifically excludes certain acts from its purview.
Therefore, except the excluded acts, the managing director has power and privilege of conducting the business of the company in accordance with the memorandum and articles of association of the company.
1. In case of appointment of managing director/whole time director, other than the existing directors, first they will be appointed as an additional director by the directors of the company. (In case of appointment as an additional director,complete the formalities of appointment of an additional director)
2. Arrange following documents from the appointee:
3. Prepare notice of board meeting along with draft resolution(s) to be passed in the board meeting.
4. Convene board meeting and pass the following board resolution:
5. Prepare draft minutes of the board meeting and circulate, within a period of fifteen days from the date of conclusion of that meeting, to all directors, by hand/speed post/registered post/courier/e-mail or by any recognized electronic means, for their comment(s).
6. Issue letter of appointment to the appointee.
7. Obtain disclosure of interest by director under Section 184 of the Companies Act, 2013 in Form MBP-1. [in case of re-appointment of existing director or in case of person appointed as an additional director.]
8. File e-Form DIR-12 along with attachments with the Registrar of Companies regarding appointment of director as an additional director and simultaneously as a managing director/whole-time director.
9. 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 Managing Director.
10. Make necessary entries in the register of directors, key managerial personnel and their shareholding.