Non executive chairman

Save Share

This query is : Resolved

Bhuvaneswari (Querist)
Follow

23 February 2013 Dear Sir
If a Person is appointed as chairman of the company ( and he is not taking part in the day today affairs of the company, whether he is a executive director or a non executive director. my doubt is if the chairman is appointed for the company then he is bound to be executive director. Kindly advice.
Thanks in advance

Ajay Mishra

Ajay Mishra (Expert)
Follow

23 February 2013 Hi

Go to the following link, it may help you:

https://www.caclubindia.com/articles/details.asp?mod_id=15760#.USiMUh2VOJw

Ajay Mishra

Ajay Mishra (Expert)
Follow

23 February 2013
The term “Chairman” is not defined in the Act though regulation 76 (1) of Table A to Schedule I to the Companies Act, 1956 provides that the Board May elect a chairman of its meeting and determine the period for which he is to hold office. Generally, the directors elect one of them to be the chairman of the Board who continues to be as such until he ceases to be a director or some other director is appointed as the chairman. In Board meeting the mandatory requirement to become a Chairman is, he should be a member of the Board.
Normally, a chairman is a director who is authorised to preside over the Board and general meeting. In some companies, it is a practice to appoint an Executive Director namely the Managing Director or Whole Time Director as Chairman/Chairperson of the Board Meeting or General meeting and there are other companies who elect a Non-Executive Director, i.e. the director who is not in whole time employment or managing director as the Chairman/Chairperson of the Board or General Meeting.
In India, we have Board, which are chaired by managing directors, who are known as chairman-cum managing director (CMD). Which have also board, which are chaired by directors, who are not whole time directors. A CMD is sometimes called a whole-time chairman whereas a director, who is not a CMD of the company, is called part- time chairman.
Regulation 76 (2) provides that if no chairman is elected or if at any meeting the chairman is not present within five (5) minutes after the time appointed for holding the meeting the directors present may choose one among them to be the chairman of the meeting. The Chairman appointed in that meeting will continue as a chairman only for that meeting and he has same rights and responsibilities as the original Chairman have, if he will present.
Clause 49 (I) (A) to the Listing Agreement deal with composition of the Board of the company. It says that where the Chairman of the Board is a non-executive director, at least one-third of the Board should comprise of independent directors and in case he is an executive director, at least half of the Board should comprise of independent directors.
Provided that where the non-executive Chairman is a promoter of the company or is related to any promoter or person occupying management positions at the Board level or at one level below the Board, at least one-half of the Board of the company shall consist of independent directors.

You need to be the querist or approved CAclub expert to take part in this query .
Click here to login now