In this editorial author shall discuss the process and provision of appointment of a person as Additional Director as well as Managing Director in Board Meeting. For this purpose Companies have to comply with Following Sections:
1. 161(1) Appointment of Additional Director
2. 196 Appointment of Managing Director
3. 170(2) Filing of Form for Appointment of Director
Many times professionals asked questions about “Whether an additional director can appoint as MD?” If yes, what shall be term of appointment of such MD etc.
As per Companies Act, 2013 Section 152, Power of appointment of Director vested with Shareholder of Company by passing of resolution in General Meeting. However, as per Section 161(1), if power is given in AOA then Board of Directors can appoint director of the Company with some conditions.
There are three concepts for Director:
As per 161(1), additional Director has all the liabilities, responsibilities, powers etc same as director appointed in Section 152. Only difference between director appointed in 152 & 161(1) is that;
To become Managing Director a person should be Director (whether additional or normal Director). As per 196(4), MD shall be appoint by Board of Director in their Meeting subject to approval of shareholder resolution in at the next general meeting.
Therefore, one can opine that additional Director can be appoint as MD also in same board meeting subject to approval of General Meeting.
Process Appointment of Additional Director as well as MD in Board Meeting:
I. The person going to appoint as AD as well as MD must having DIN.
II. Hold Board Meeting and pass two resolutions:
III. File e-form DIR-12 within 30 days of passing of Board Resolution for appointment as Managing Director.
IV. In the Notice of Annual General Meeting, mention a resolution regularizing of such person and continue such person as Managing Director.
V. Pass ordinary resolution in AGM to continue appointment of such person as Managing Director.
VI. MCA site shall not allow to file DIR-12 for the resolution passed in general Meeting as DIR-12 as designation MD has already beenfiled.
(Author – CS Divesh Goyal, GOYAL DIVESH & ASSOCIATES Company Secretary in Practice from Delhi and can be contacted at [email protected])