This Section
is applicable on Both Private as well as Public companies. Only this section of
Chapter-XIII applicable on Private Companies. At the time of practical working
on this section, some points create difficulties, because for appointment of
Managerial Personnel company have
to comply with provisions of Section- 196 and
have to leave all other sections of this chapter.
MY OPINION: As per Law, there is no compulsion for
private company to appoint MD, WTD and Manager. As per Act Private Company can be
in continue working without MD, WTD and manager throughout the life of company.
But problems
arise when Private company appoint any Managerial Personnel willingly. Then company
requires following Section: 196 of CA-2013.
SECTION- 196:
Ø A company
can appoint either Managing Director or Manager not both {Sub – section (1)}.
Ø MD, WTD and
Manager can be appoint for maximum tenure of 5 years. But company may reappoint
them for next term of 5 Years or lesser period, before expiry of existing term.
Ø But
re-appointment cannot be done earlier than one year before expiry of the term.
This means, company may re-appoint them for next term in last one year of
current term.
Ø The minimum
age for appointment for these positions is twenty – one years and normal
retirement age is seventy years. (So the person who does not attain age of 21
year can’t appoint as Managerial Personnel).
Ø But a person
who has attained age of 70 year can be appoint as Managerial Personnel, by
passing of Special Resolution in General Meeting, Condition: Explanatory
Statement justifying such appointment shall be annexed to the notice of General
Meeting for motion of appointment.
Ø For
appointment of a person who has attained age of 70 year following procedure:
·
Call a Board Meeting
·
Issue notice of General Meeting
·
Pass Special Resolution In General Meeting.
·
File MGT-14 with ROC within 30 days of passing of Resolution.
·
File form DIR-12 and MR-1 with ROC with in 30 days of passing of
resolution of appointment.
Ø To appoint a
person as Managerial personnel:
·
Appointee should not be an un-discharged insolvent nor has any
time been adjudged as an insolvent.
·
Appointee has not any time suspended payment to his creditors or
has made a composition with them.
·
Appointee should not be a convict of an offence and sentenced for
a period of more than six months. {Sub – section (3)
APPOINTMENT OF MANAGERIAL PERSONNEL:-
For
appointment of Managerial Personnel in private company we have to do following
things:
1. Require to
pass Board Resolution.
2. Require
approval of Share Holders in General Meeting.
3. Follow the
provisions of Schedule – V of Companies Act, 2013. (If there is any variance to
the conditions specified in the schedule, this appointment shall also be
subject to the approval of the Central Government. {Sub – section (3)})
PROCEDURE FOR APPOITNT OF MANAGERIAL PERSONNEL IF COMPANY
HAS ADEQUATE PROFIT:
v Terms and
conditions of such appointment.
v Remuneration
payable to such Managerial Personnel.
v Interest of
Directors in such appointment.
v Declaration
that he is not disqualified to appoint as director. (Secion-152(4).
v Consent that
he is willing to appoint as director.(Section-152(5).
v Consent that
he is willing to appoint as Managing Director.
DRAFT FORMATS ATTACHED BELOW:
FAQ’S:
1.
Is it
mandatory to file the return of appointment of Managerial Personnel
appointed in terms of Section 196?
Ans. Yes – it is
mandatory for a company to file a return of appointment of a managing director,
whole time director or manager, chief executive officer, company secretary and
Chief Financial officer in Form no. MR.1 as prescribed in Rule 3 of the
Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014. Further,
particulars of appointment of Managerial Personnel and any change among them
are also required to be filed in Form DIR-12.
2.
Can a company
have two Managing Directors?
Ans: As per
third proviso to section 203 of the COMPANIES ACT, 2013 a company may appoint
or employ a person as its MD, if he is the MD or Manager of one and not more
than one other company with the consent of all directors present at meeting.
3.
Will
Provisions of Section- 197 applicable on Private Companies?
Ans. No, the provision of Seciton-197 will not
applicable on private companies. For appointment of managerial personnel
private company require to follow section-196, but there is no need to follow
section-197 for remuneration to managerial personnel.
4. Will
Managerial personnel appointed under section 196, treated as KMP?
Ans. No, Managerial Personnel will not be treated as KMP.
Section: 203
talks about KMP and this section not applicable on Private Companies. So if a
private company appoints any managerial personnel there Is no need to follow
provisions of section-203.
5. If any
existing director is interested director in pursuance to appointment of Managerial
Personnel, so can he participate in this resolution?
Ans: No, Existing Director can’t participate in this resolution, As per
Section-184 of Companies Act, 2013. Such interested director have to disclose
before the meeting his interest.
CONCLUSION: As per Companies Act-2013 there is no
compulsion to appoint MD/WTD/MANAGER. But some companies Appoint
MD/WTD/MANAGER. So Private companies can appoint MD/WTD/ Manager as per process
given above. In Companies Act-2013 process is lengthy but it’s not as
difficult. It’s just require assistance of Professionals like Company Secretary
or Charted Accountant. Because there is heavy penalty under Companies Act-2013.
So its my request from all professionals and businessman be careful while
working under companies Act-2013.
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