Key managerial personnel

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30 March 2015 U/S 203 whether MD and manager together can be appointed as KMP in a Company or not

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30 March 2015 u/s 196 can any company continue the employment of any person who has attained the age of 70 yrs after passing SR or not

Aashok Kumar Sharma online

Aashok Kumar Sharma

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02 August 2024 Here’s a detailed explanation of the provisions under the Companies Act, 2013, concerning the appointment of Key Managerial Personnel (KMP) and the employment of individuals who have reached the age of 70:

### **1. Appointment of MD and Manager as KMP**

**Key Managerial Personnel (KMP) under Section 203:**
- **Definitions**: According to Section 203 of the Companies Act, 2013, the KMPs of a company include:
- The Chief Executive Officer (CEO)
- The Managing Director (MD) or Whole-Time Director (WTD)
- The Chief Financial Officer (CFO)
- The Company Secretary (CS)

**Appointment of MD and Manager:**
- **Managing Director (MD)**: The MD is a KMP as per Section 203.
- **Manager**: Under Section 2(53), a "Manager" is defined as an individual who is appointed under Section 196(1) of the Companies Act. A manager, in this context, is someone appointed under the provisions for managerial personnel and does not necessarily overlap with KMP roles.

**Combination of Roles:**
- **MD and Manager as KMP**: A company can have a Managing Director as a KMP. If a Manager is also a KMP, it would generally be because they are either fulfilling another KMP role or are a key executive. The Act does not specifically prohibit having both an MD and a Manager as KMP, provided the roles and responsibilities are clearly defined and comply with the Act's provisions.

### **2. Employment of Person Above 70 Years of Age**

**Section 196 and the Employment of Individuals over 70 Years:**
- **Section 196(3)**: Under Section 196(3) of the Companies Act, 2013, a person who has attained the age of 70 years can be appointed as a Managing Director, Whole-Time Director, or Manager if the appointment is approved by a special resolution.
- **Continuing Employment**: If a person has reached the age of 70 and is already in employment, the company can continue their employment beyond the age of 70, provided that:
- The company passes a special resolution to approve their continuation in the role.
- The provisions of the Companies Act, 2013, regarding managerial personnel and other relevant regulations are adhered to.

**Special Resolution (SR):**
- **Requirement**: The special resolution must be passed by the shareholders to continue employing a person who has attained the age of 70 years. This ensures that the decision is made with shareholder consent and complies with legal requirements.

### **Summary and Action Steps**

1. **MD and Manager as KMP**:
- **Appointment**: Ensure that the roles of MD and Manager are clearly defined. Both can be KMPs if they fulfill the required roles and responsibilities.
- **Compliance**: Make sure that the appointments comply with all relevant provisions of the Companies Act, 2013.

2. **Employment of Persons Over 70**:
- **Special Resolution**: To continue employing a person over 70 years of age, pass a special resolution to approve their continued employment.
- **Documentation**: Ensure that all required documentation and filings are completed to reflect the special resolution and continued employment.

**Consultation**: For specific guidance and to ensure compliance with the Companies Act, consulting a corporate legal advisor or a company secretary is recommended. This will help navigate the complex regulations and ensure that all requirements are met properly.

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