Section 316 of companies act, 1956

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

20 September 2012 We have a Company ABC ltd. who is having MD named A. We have associate company XYZ Pvt. Ltd and its subsidary BBC pvt. ltd. It is proposed that Mr. A be appointed as M.D in both these private companies and Mr. A will continue to be MD of the public company ABC ltd.

My query is that, inorder to obtain approval of Central Government as per section 316 (4), e-form 25A is required to be filed. In this case which company is required to file form ?

Whether ABC Ltd which is a public company should file it? OR
The Private ltd. company in which Mr. A is to be appointed is required to take approval under eform 25A ?

Ajay Mishra

Ajay Mishra (Expert)
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20 September 2012 Hi

As per my understanding,the provision of section 316 is applicable to public company and not to private limited company.

A person can me appointed as MD in many private company without the approval of CG.

Form-25A is required when you are going to appoint such MD in other public companies.

Querist : Anonymous

Querist : Anonymous (Querist)

20 September 2012 Hello Sir,

I agree with your views. Just one thing to confirm here is when in the above case a MD is appointed in public company then he can be appointed only in one more company be it public or private company. But if such MD is not appointed in Public company then in that case a person can be appointd as MD in any number of Private companies.
Please advise if I am right in my understanding.

Ajay Mishra

Ajay Mishra (Expert)
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20 September 2012 Hi

Yes, absolutely right.

Please also kept in mind that such private company should not be subsidiary of public company.

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