Non Compliance in the use of KMP designation by private companies

Affluence Advisory | Last updated: 22 July 2022

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The Companies Act, 2013 defines Key Managerial Personnel (KMP) as the executive management of a company. While private companies aren't mandated to appoint specific KMPs like MDs or CEOs, they must follow strict procedures if they voluntarily designate officers as KMPs. This includes obtaining Board approval via resolution and filing Form DIR-12 within 30 days. Failure to comply can result in penalties, as demonstrated by a case where a company wrongly designated a director as CEO without following the correct process.

The executive management of a company is responsible for the day-to-day functioning of the company. The Companies Act, 2013 has used the term key managerial personnel to define executive management. The key managerial personnel are the point of first contact between the company and its stakeholders.

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