Re-appointment of managing director

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Querist : Anonymous

Querist : Anonymous (Querist)

16 January 2013 Mr. X is MD in two companies Co. A and Co. B. (Both are unlisted public companies). Both the Companies have adequate profits and the MD receives remuneration from both the companies subject to Section-III of Part-II of Schedule-XIII. His term as MD in Co. B expires on 31st Jan 2013. For re-appointment, will passing of Board Resolution (BR) with consent of all directors pursuant to Sections 198, 269, 309, 310, 311 and 316 read with Schedule XIII and filing of e-form 23 and 25C, be enough?

The Articles authorizes the Board to appoint MD. Should I pass Shareholders’ Resolution also by calling an EGM? If yes, then time limit for that? And Ordinary or Special Resolution (Articles is silent on this)?

Whether any agreement is compulsorily required to be entered into between the Company and the MD? Or BR is enough? Sec 2(26) says MD can be appointed by BR (i.e. may be without any formal agreement).

Ajay Mishra

Ajay Mishra (Expert)
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17 January 2013 Hi

If you are appointing MD as per schedule XIII in Board meeting then you will appoint him subject to the approval of shareholders. Filing of Form-23 and Form-25C would be enough.
Yes, shareholders approval is required as per Part III of Schedule XIII but it is not mandatory to call general meeting only for this appointment. The time limit is not specified. You can pass a shareholder resolution (ordinary) as and when your general meeting will be held and approved the resolution by shareholders.

Yes, an agreement with MD is required to be entered and the main part the agreement will also be included in Board resolution at the time of appointment including remuneration.

In Form-23 you only attache CTC of Board Resolution.

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Querist : Anonymous

Querist : Anonymous (Querist)

17 January 2013 Thanks a lot Mr. Mishra for your help. Sir if I only attach ctc of BR in Form-23 then in Form-25C, i should attach ctc of BR and the agreement with MD. Am I correct?

Ajay Mishra

Ajay Mishra (Expert)
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17 January 2013 Hi

No need to attach an agreement with any form. Only CTC of Board Resolution will be sufficient with both forms.

Querist : Anonymous

Querist : Anonymous (Querist)

17 January 2013 Thank you so much Mr. Mishra. Thanks a lot.

Ajay Mishra

Ajay Mishra (Expert)
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17 January 2013 My pleasure..............

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