Section 383A is still here in new Companies Bill 2009

This query is : Resolved

Manish (Querist)
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11 September 2009 Dear All,

I have a query on new Companies Bill.

Sec. 2(zza) “key managerial personnel”, in relation to a company, means —
(i) the Managing Director, the Chief Executive Officer or the Manager and where there is no Managing Director or Manager, a whole-time director or directors;
(ii) the Company Secretary; and
(iii) the Chief Financial Officer;

Furher, section 178 provides that:
(1) Every company belonging to such class or description of companies as may be prescribed shall have whole-time key managerial personnel.
(2)Every whole-time key managerial personnel of a company shall be appointed by means of a resolution of the Board containing the terms and conditions of the appointment including the remuneration.
(3) A whole-time key managerial personnel shall not hold office in more than one company at the same time:
Provided that nothing contained in this sub-section shall disentitle a key managerial personnel from being a director of any company with the permission of the company.
(4) If the office of any key managerial personnel is vacated, the resulting vacancy shall be filled up by the Board at a meeting of the Board within a period of six months from the date of such vacancy.
(5) Where a company fails to comply with any of the provisions of this section, it shall be liable to a penalty of one lakh rupees and every director and key managerial personnel who is in default shall be liable to a penalty of twenty-five thousand rupees, for each such default.

1. In my opinion, section 178(1) states that "shall have whole-time key managerial personnel". It does not states "shall have a whole-time key managerial personnel or atleast one key managerial personnel"..

2. We all know the personnel (context sec 178(1) is used both for single person and plural.

3. Further, my opinion gets support from sec 2 (zza) (ii), as it uses word "and" after company secretary.

4. Choices are given in sec 2 (zza) (i), as it uses "or" for the Managing Director, the Chief Executive Officer or the Manager and where there is no Managing Director or Manager, a whole-time director or directors;

Hence, in my opinion in light of above interpetation, appointment of all KMP is required.

We require clarity on this matter.

What are your opinions?

Regards,
Manish

CS Vivek Hegde

CS Vivek Hegde (Expert)
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11 September 2009 Dear Manish

In this section there is no confusion except the words "such class or description of companies" which should be clarified by Rules.

A company(such class or description) should have KMPs. All three...

rgds

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