Appointment of Directors & MD

Pvt ltd 11537 views 10 replies

Dear All,

A private limited company having 4 directors (say A, B, C & D) as per AOA was incorporated on 17.08. 2009 with Authorised capital of Rs. 1.00 lac. In the 2nd Board meeting held on 31.08.2009, the company appointed 2 more directors (say E & F) as Additional Directors to hold office till first AGM of the company. In the same Board meeting, the very same additional directors (E & F) were also appointed as normal directors, subject to approval of the shareholders in EGM. Form 32 for appointment of E & F as Additional Directors, has already been filed with ROC on 05.09.2009.
In the same Board meeting (31.08.2009),  A was appointed as Managing Director of the company w.e.f. 01.09.2009 on a remuneration to be decided later on by the Board. AOA gives power to the Board for appointment of MD on the terms and conditions and on the remuneration as decided by the Board. Directors A & B are related and Directors C & D are also related.
Notice for EGM was approved by the Board on 31.08.2009 and was issued for calling EGM on 10.09.2009 on a short notice (instead of 21 days) after taking written consent of all the 4 shareholders.
My queries are as under: -
1)      Whether appointment of E & Y as additional director first and normal directors later on (subject to approval of EGM) in the very same Board meeting , is correct or not? I think it is possible.
 
2)      Now, after appointment of E & F as normal Directors in EGM (10.09.2009), is only Form 32 for change in  Designation to be filed within 30 days or some other Form / documents are also to be filed with ROC.
 
3)      Can MD be appointed by the Board of a Pvt. Ltd. Company without any approval from shareholders in EGM?
 
4)      Can MD’s remuneration be decided later on by the Board of a Pvt. Ltd. without any approval from shareholders in EGM?
 
5)      If EGM approval is required for MD’s appointment and remuneration, can this matter be considered in proposed EGM to be held on 10.09.2009?
 
6)      Now, after appointment of A as MD, is only Form 32 for change in Designation to be filed or some other Form / documents are also to be filed with ROC.
 
7)      If remuneration of MD is finalised in the next Board meeting (say on 01.10.2009) w.e.f. 01.09.2009, is Form 25C to be filed with ROC or some other Forms / documents are also to be filed with ROC.
 
Your expert opinion is solicited for the above queries.
 
Thanks in advance,
 
CA. Satendar Kumar
 
Replies (10)

My reply to your queries is as follows:

 

(1)In any board meeting normal directors can not be appointed, Only additional directors and Directors in casual vacancy can be appointed.

 

Your company will have to appoint them as additional director in the board meeting and will have to regularize them in the next general meeting.

 

(2) Form 32 has to be filed after they are regularized in the General Meeting. Because form 32 has to be filed every time when the status of the directors has been changed.

 

(3) MD can not be appointed without the approval of the shareholders in the General meeting.

 

(4) MD’s remuneration can not be decided later on as the remuneration of MD is one of the matters of the Agreement of his appointment.

 

(5) Yes, approval of MD’s appointment can be considered in the EGM. But the notice of the EGM must have to clearly mention the proposed resolution of the MD’s appointment and Explanatory statement to his appointment.

 

(6) Yes. Form 32 has to be filed as the status of the Mr. A has been changed to MD from the director.

 


 

 


 

 

 

 

 

If you need further clarification or guidance than contact me:

 

Ankur Shah (Practicing Company Secretary)

“Guru Gautam” Bungalow, Inside Parshwa Tower,

Nr. Shyamal Cross Road, 132ft. Ring Road,

Satellite, Ahmedabad – 15

 

Contact: + 91-9427633901

E-mail: ankurjewel @ gmail.com

Blog: csankur.blogspot.com

 

 

 Dear All,

 E- Form 25C is only applicable to Public Companies or Private Company which is a subsidiary of public Company- As per section 269(2).

Any resolution passed by Board of Directors relating to appointment or reappointment  of Managing  Director or Whole Time Director, E-form-23 should be filed  under clause (C) of Sub-section (4) of Section 192 of the Companies Act, 1956. (Applicable to all Companies)

The Board of Director can’t appoint the Managing Director or WTD unless the Articles of Association providing the power.

In the above case, I assume your company is independent private company so Form 25C need not be filed, however form 23 should be filed within 30 days from the date of passing the Board resolution.

Dear M.J. Mani Vannan

 

As you are saying that Form 23 is required to file with ROC under section 192 (4) is partly correct, this is applicable only to Managing Director and not for Whole time Director. you can appoint WTD withot filing Form 23 with ROC.

 

Regards

 Dear Mr.Ajay Misra!

 

Thanks

Dear Ankur,

Thanks for your prompt reply but I am not fully convinced with your reply. My further points are as under: -
1)      In my opinion, Normal directors are also to be first appointed in the Board meeting but subject to approval of members in general meeting. Only thereafter, Notice of EGM is to be approved by Board. After appointing as an Additional Director (appointment effective from the date of Board meeting) the same person was also appointed in the same Board meeting as a normal Director subject to approval of members in the EGM (appointment effective from the date of EGM).  Is there any specific provision in the Companies Act, which prohibit appointment like this.
 
2)      If appointment as mentioned above in Point no. 1 is not permissible, please let me know the proceedure as to how an Additional Director, who  is holding office till the date of next AGM of the company, can be appointed as a Normal Director before the date of AGM.
 
3)      Since the AOA has given powers to the Board for appointment of MD on the terms and conditions and on the remuneration as decided by the Board, why and under which Section of the Companies Act, approval of the shareholders in general meeting is required?
 
4)      You mentioned earlier in your note that general meeting at shorter  notice than 21 days can not be called. In this connection, please refer provisions of Sec- 171 (2), which clearly provide for short notice with the consent of members.
 
5)      In my opinion and also as pointed out by Mr. Mani Vannan, even Form -25C is not to be filed , since Sec-269 (2) is not applicable on Pvt. Company unless it is a subsidiary of a public company.
Please clarify further keeping in view my above points.
Thanks,
CA. Satendar Kumar
Email: skr_ca @ rediffmail.com

Dear Satendar

There is no such provision regarding appointing a Director as a Normal Director in BOD meet.

The only way to convert an Additional Director to a Normal Director is through a General Meeting ONLY...

You cannot convert an Additional Director into Normal in a Board Meeting.

Regarding MD:-

The only thing i feel is you can allow existing Director to be a MD of a Company in a Board Meeting.

Please anyone Correct me if i am wrong in regards to MD Provision.

Regards

Lucky

A person first appointed as an additional director in BM n for that file Form 32. then in EGM same appointed as MD/WD , then file Form 32 for change in designation, Form 25C for App og MD/WD and Form 23 for passing special resolution in GM. this is for a public company.... if i m wrong plz suggest me...

Regards,

Nirupam

Hi all,

Can anyone pls tell me which section tells that There is no need to pass a special resolution for appointment of a Director in EGM. He can be appointed by way of an ordinary resolution.

Pls help me out.

Thanx in advance.
 

Can a Managing Director directly appointed in Annual General Meeting by changing their  designation from Director to Managing Director.

can any one help me by replying this? Can Mr. X, a wholetime Director of public ltd. co. , drawing a remuretion of Rs.1001/- pm be appointed Manager u/s 269 in another Public Ltd company of  paid up share capital of rs.24 crore and who is also an employee (Full time) of the that Company as president.


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