Appointment of managing director in pvt ltd company

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Querist : Anonymous

Querist : Anonymous (Querist)

10 March 2013 DearSirs,
I have initiated the process of incorporating a pvt ltd company with one of my business associate. I have following queries in this regard:
1) is it necessery to have a MD (managing Director)in a pvt ltd company or it can function with two directors as minimum numbers of Directors.
2) Does the salary need to be given to Director/s need to be mentioned in articles of association.

Ajay Mishra

Ajay Mishra (Expert)
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10 March 2013 Hi

I will suggest you to Incorporate a company with minimum two directors.

After incorporation of the company, you appoint one person as MD.

The provisions of Companies Act, 1956 relation to appointment of MD/WTD/Manager will not be applicable to private limited company. So u r free to appoint a director as MD.

The provision of appointment of MD will govern by your company's articles.

The provisions of remuneration to director of the Companies Act, 1956 will also not apply to private limited company, so you can pay remuneration subject to your company's articles.

No need to be mentioned in AOA regarding remuneration . You adopt specific format of AOA for this.

Ajay Mishra

Ajay Mishra (Expert)
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10 March 2013 Procedure for Appointment of MD

1. Call a Board Meeting for proposal of appointment of MD
2. Payment of Remuneration to MD.
3. Hold a Board Meeting for above purpose and call general meeting.
4. File Form-25C within 90 days from the date of appointment for MD.

5. Hold a General Meeting for passing of resolution under section 257 to regularize the additional director, appointment of MD fix the remuneration of MD under section 198 and 309.
6. File Form-32, with ROC, of change in position of director attach certified copy of shareholders meeting. (you only mentioned in Form-32 as change in Position and designation will be MD).
7. File Form-23 under section 192 of the Companies Act, 1956.
8. Take entry in Minutes.

Querist : Anonymous

Querist : Anonymous (Querist)

10 March 2013 Thanks Mr Mishra for quick reply...

A few more queries:

1) Is it possible to run a company without MD i.e. with just two directors?
2) As we are two directors and other person is a business associate, what all I need to be careful about to avoid any kind of cheating/conflict at a later stage.
3) Can a person b director in many companies simultaneously?

CS Ankur Srivastava

CS Ankur Srivastava (Expert)
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11 March 2013 Yes, in case of private company and even public companies having paid up capital less than Rs. 5 Crore, appointment of WTD / MD is not necessary.

You may incorporate and continue private company with 2 directors as specified.

CS Ankur Srivastava

CS Ankur Srivastava (Expert)
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11 March 2013 A person may be Non Executive Director in more than 1 Companies but not Executive Director.

Ajay Mishra

Ajay Mishra (Expert)
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11 March 2013 Agree with expert Mr.Ankur...........