Appointment of MD sec 316

No neha, you are wrong, if proposed appointing company is private company then there is no need for CG apporoval

again making complications......

First of all if any person is already a managing director in any public company then he can be MD only in 1 other company whether it is public or private.

See, i am totally confirm because i just completed this section with reputed teacher Mr. Deepak Gajrani, C.S., L.L.B and if you have still doubt then take a chance fill form 25A for CG approval in appointment in private company and see whether you wil get the apporval or not

at last, i am true to best of my knowledge

thanks

sir, he can be MD in more than two public company, with CG approval in form 25A refer 316(4)

Yes, but only with central Government approval.

ok all members ,

after reading all my conclusion is :

If Mr. A want to become MD in any other PUBLIC co , than it need unanimous consent from all the director  if Mr A is already MD of any Pub/Pvt comp. 

but if Mr A want to becom MD of more than 2 PUBLIC com than he need Govt approval , over all he can becom MD of 15 Public company with Govt approval.

ABT PVT.: Mr A can become MD of any number of Pvt Company . he need no approval or Unanimous consent , since act is silent. 

Originally posted by : Mukesh Rawal
	See, i am totally confirm because i just completed this section with reputed teacher Mr. Deepak Gajrani, C.S., L.L.B and if you have still doubt then take a chance fill form 25A for CG approval in appointment in private company and see whether you wil get the apporval or not at last, i am true to best of my knowledge thanks

Dear Mr. Mukesh,

First of all, with due respect to your teacher, you may be confirmed but please try to consider the intention of law and dont make complications...

How can a person be in the full time employment in various companies. Whether it is good for the management of the Company.

This is the reason why there is a limitation of only 2 companies otherwise a director can be a director upto 15 companies.

We are professionals, we should try, to our best level, to comply with the law along with the intention of law and not to find the weak points of the law.

I totally agree with you that 316 only limits the appointment in the Private Company however, as he get appointed in any third Company he has to leave the Public Company(ies).

Please see the words " appoints or employ".

Therefore, it is recommended, not to appoint any one as MD in more than 2 Companies without the approval of central government.

Further, central government approval would only be taken in case the MD is appointed as a Group Companies otherwise central government would also not give approval for the appointment of MD in more than 2 different organisaions.

Completely agree with Ankur Sir; go through the section 316 it says:-

316(1) [No public company and no private company which is a subsidiary of a public company] shall, after the commencement of this Act, appoint or employ any person as managing director, if he is either the managing director or the manager of 4[any other company (including a private company which is not a subsidiary of a public company)], except as provided in subsection (2).

(2) 5[A public company or a private company which is a subsidiary of a public company] may appoint or employ a person as its managing director, if he is the managing director or manager of one, and of not more than one, 6[other company (including a private company which is not a subsidiary of a public company):]          

Intention is quiet clear that the MD'ship of Pvt. Company will be recokned.

Regards,

Hi all.

Sec. 316(2) and 316(4) clearly apply to the situtations given.

Answer to 1st question:

An individual can be MD in 2 public companies by complying with Requirements of Sec. 316(2), viz.

(a) Unanimous Board Resolution to be passed in Board Meeting

(b) Specific Notice of the BM and of the Resolution is to be given.

An individual can be MD in more than 2 companies by complying with Requirements of Sec. 316(4), viz. -

(a) Approval of CG is to be obtained

(b) CG to be satisfied that all the companies are working as a single unit and must have common MD.

To sum up, with CG approval an individual can be MD in any no. of companies - simply no limit.

Answer to 2nd question:

Sec. 316 does not apply to a private company. Accordingly, an individual can become MD in any no. of private companies without complying with requirements of Sec. 316(2) or 316(4).

Answer to 3rd question:

As such, there is no limit on no. of private and public companies of which an individual can be MD. For becoming MD in any no. of private companies, Sec. 316 shall not be attracted. But, for becoming MD in a public company, Sec. 316(4) needs to be complied with if the individual is already MD in 2 companies.

316. Number of companies of which one person may be appointed managing director

¹[No public company and no private company which is a subsidiary of a public company] shall, after the commencement of this Act, appoint or employ any person as managing director, if he is either the managing director or the manager of ²[any other company (including a private company which is not a subsidiary of a public company)], except as provided in sub-section (2).

(2) ³[A public company or a private company which is a subsidiary of a public company] may appoint or employ a person as its managing director, if he is the managing director or manager of one, and of not more than one, ⁴[other company (including a private company which is not a subsidiary of a public company)]:

Provided that such appointment or employment is made or approved by a resolution passed at a meeting of the Board with the consent of all the directors present at the meeting and of which meeting, and of the resolution to be moved thereat, specific notice has been given to all the directors then in India.

(3) Where, at the commencement of this Act, any person is holding the office either of managing director or of manager in more than ⁵[two companies of which each one or at least one is a public company or a private company which is a subsidiary of a public company], he shall, within one year from the commencement of ⁶[the Companies (Amendment)

Act, 1960, choose not more than two of those companies as companies in which he wishes to continue to hold the office of managing director or manager, as the case may be; and the provisions of clauses (b) and (c) of sub-section (1) and of sub-sections (2) and (3) of section 276 shall apply mutatis mutandis in relation to this case, as those provisions apply in relation to the case of director.

(4) Notwithstanding anything contained in sub-sections (1) to (3), the Central Government may, by order, permit any person to be appointed as a managing director of more than two companies if the Central Government is satisfied that it is necessary that the companies should, for their proper working, function as a single unit and have a common managing director.

Thanks Mr. Gourav for the well deliberated reply.