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Directors as employee

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(Querist)
26 April 2012 can a director to be employee of a company?
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Ajay Mishra

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Ajay Mishra (Expert)
26 April 2012 Hi


A managing director is an employee of the company, but not to the extent so as to be entitled to preferential payments. (News Papers Proprietary Syndicate Ltd, Re, [1990] 2 Ch 349. A managing director who is not a director is contradiction in terms because a normal director will not be taken as an employee. [Shirlaw v. Southern Foundaries Ltd. (1940) 10 Com Cases II (CA). A managing director occupies the duel capacity of being a director as well as employee of the company. The day to day management is entrusted to the managing director who can exercise power of management without referring to the Board. It is necessary that the articles must provide for such an appointment being made.


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