Appointment of md in a pvt ltd company

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

23 July 2014 Whether appointment of managing director is compulsory in case of private limited company having authorized, subscribed and paid up share capital Rs 100.00 Lakhs?

If yes then what is the procedure?

Also give the model resolution to be passed?

If appointed then whether such appointment need be filed with MCA? If yes, then the e-Form and time limit?

If appointment is not compulsory, then how to appoint MD voluntarily in a case where 2 directors themselves are the shareholders in a private limited company.

What are the provision regarding retirement of MD so appointed?

CS Mitesh Mehta

CS Mitesh Mehta (Expert)
Follow

24 July 2014 Section 203 of the Companies Act, 2013 read with Rule 8 mandates the appointment of Key Managerial Personnel and makes it obligatory for a listed company and every other public company having a paid- up share capital of Rs. 10 crores or more, to appoint following whole-time key managerial personnel:

(i) MD, or CEO or manager and in their absence, a WTD;

(ii) CS; and

(iii) CFO:

In your case, being a private company, appointment of MD is not mandatory.

However, if company wants to appoint MD,following points should be taken care of;

1. An individual shall not be appointed or reappointed as the chairperson of the company, as well as the MD or CEO of the company at the same time unless AOA of such a company provide otherwise; or the company does not carry multiple businesses. However, such class of companies engaged in multiple businesses and which has appointed one or more CEO for each such business as may be notified by the Central Government are exempted from the above.

2. MD shall not hold office in more than one company except in its subsidiary company at the same time. However, he can hold such other directorship with the permission of the Board.

3. Section 196 of the Companies Act, 2013 provides that no company shall appoint or employ at the same time a MD and a Manager. Further, a company shall not appoint or reappoint any person as its MD for a term exceeding 5 years at a time and no reappointment shall be made earlier than 1 year before the expiry of his term.

3.Section 196(4) of the Companies Act, 2013 provides that subject to the provisions of section 197 and Schedule V, a MD shall be appointed and the terms and conditions of such appointment and remuneration payable be approved by the Board of Directors at a meeting which shall be subject to approval by a ordinary resolution at the next general meeting of the company.

4. A return in the prescribed form viz. MR.1 is required to be filed with Registrar within 60 days from the date of such appointment.

5. Check relevant provision in AOA of the Company. The Provision of appointment of MD will be governed by your company's AOA.