Can a whole time director of a public co. be appointed as md

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Deepika Bhardwaj

Deepika Bhardwaj (Querist)
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12 September 2012 Can a Whole time director of a public co. be appointed as MD of another public Company?

Ajay Mishra

Ajay Mishra (Expert)
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12 September 2012 Hi

No, a WTD is an whole time employee of the company he can not be MD of another company.

Deepika Bhardwaj

Deepika Bhardwaj (Querist)
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12 September 2012 Can you pls refer any provisions putting restriction on the appointment of WTD as MD of any other Company.

According to Act, WTD cannot be apopointed as WTD of another Company but i hv not found any restriction on the appointment as MD of another Company.

Ajay Mishra

Ajay Mishra (Expert)
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12 September 2012 Hi

As per my understanding, a whole time employee who is appointed as WTD will not be eligible to appoint an executive director in other company.

Other views are also solicited.

Guest

Guest (Expert)

12 September 2012 As per section 269 of the Act, a whole-time director includes a director in the wholetime employment of the company. In other words, a director who devotes his whole time to the affairs of a company is called a whole-time director of the company.

A whole-time director of a company cannot accept the position of a whole-time director in other companies, though he may accept office of non-whole-time director in other companies subject to the limits imposed by section 275 read with sections 277 and 278.

Deepika Bhardwaj

Deepika Bhardwaj (Querist)
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13 September 2012 Ms. Neha Jain, can you pls clarify your interpretation.

WTD can not take position of WTD in another Company, but can he take position of MD in another company.

Guest

Guest (Expert)

13 September 2012 Dear Deepika,

A WTD can not take position of MD in another company as well.

Regards

Deepika Bhardwaj

Deepika Bhardwaj (Querist)
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21 September 2012 Pls take note of the views of learned Company Secreatray which I also feel is correct:

"MD by the definition given in Sec.2(26) has substantial powers of management of the company. What we avoid is dual employment of the person in two companies at the same time. However, law does not prohibit a WTD to acquire substantial powers of management of another company without any remuneration."

Hence, he can be appointed as MD of other company without remuneration.

Ajay Mishra

Ajay Mishra (Expert)
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21 September 2012 Hi

As per my understanding, in case of MD the Companies Act has given liberty to company that either appoint him with substantial power or without giving substantial power as definition of MD says.

But, when i read explanation of WTD, it says, a whole time employee. The term whole time itself give a detail definition that he can not hold MD post in other company with or without substantial power.

If you want to take advantage of loophole on WTD under Companies Act, 1956, you can.

Guest

Guest (Expert)

21 September 2012 Agree with Ajay Mishra ji.

Deepika Bhardwaj

Deepika Bhardwaj (Querist)
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22 September 2012 words "Whole time employee" used for Whole time director doesn't mean an enployee who comes at 10.00 a.m. and leave at 6.00 p.m. just like other whole time employees do.

In how many company rules and regulations applicable to employees also applies to WTD.

Even MD works as whole time employee. MD also gives his whole time to the Company and can be appointed as MD in another Co.

I respect your views but in my opinion, since, Act has not restricted appointment of WTD as MD of another Co., he can take position of MD in group Company with strong reason of his such appointment.

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