Krushna (ACS) (119 Points)
12 January 2012Dear All,
This is my query refereing to Sec 2(24) and Sec 269 of Companies Act.
Can the manager of the company also de ac director of the company as sec 2 (24) of Companies act says manager includes director. further sec 197(A) does,nt prohibit appointmen of WTD and manager at the same time.
pradeep
(Company Secretary)
(35 Points)
Replied 12 January 2012
Extract of letter no- 8/16(1)/61 PR, dated 9-5-1961 :
Director acting as Manager or Secretary.-If a Director of a company works in that company as a Manager and Secretary, then, in fact, he is the Managing Director of that company holding office of profit as a Secretary, but section 314 does not apply to a Managing Director. So, Special Resolution is not needed for his appointment as a Secretary.
Sec 197A says company can not appoint MD and manager both.
Hence you are right company can appoint WTD and Manager both.
YES, Manager of the company can also be director. There is no restrictions whatsoever. Section 314 will be applicable in this case.
Other views are also solicited.
Regards
Raj Kumar
(Student)
(102 Points)
Replied 12 January 2012
Raj Kumar
(Student)
(102 Points)
Replied 12 January 2012
sivaram
(Asst Mgr-Taxation)
(6918 Points)
Replied 12 January 2012
Ms Neha has given the correct answer but I have so far not read sec314 ie Directors and Associates in place of profit so cant comment on the same
pradeep
(Company Secretary)
(35 Points)
Replied 12 January 2012
As per Department's Clariffication: If a Director appointed as Manager, in fact, he would be considered as Managing Director. Therefore provisions of Managting Director shall be applied and section 314 will not be attracted.
As per regulation 82 of Table A Director may be appointed as Manager.
Pls note following also:
1. If a director is appointed as manager and he cease to hold office of director then office of manager will not come to an end and he will continue to hold office of manager as per his terms of appointment.
2. A company can not have more than one manager.
3. A person can not become whole time director of more than one company.
4. A company can have more than one managing director.
I am not convinced with pradeep's reply that :
If a Director appointed as Manager, in fact, he would be considered as Managing Director. Therefore provisions of Managting Director shall be applied.
Pradeep, pls state where can i find this Department's Clariffication?
pradeep
(Company Secretary)
(35 Points)
Replied 12 January 2012
Dear Neha
I am giving the reference of letter of DCA : letter no. 8/16(1)/61-PR dated 9-5-1961, the same has been specified in the Ramaiya's Companies Act.
J. Manivannan
(Advocate & IP)
(242 Points)
Replied 12 January 2012
Section 314 exempts in case of Director appointed as Manager of the Company, if it is public limited then appointment of Manager is covered under Section 269 and Schedule XIII to the Companies Act,1956, hence you need not pass a resolution once again under section 314 of the Act.
Further Section 197-A prohibits only against simultaneous appointment of Managin Director and Manager but not appointment of Whole Time Director and Manager or Managin Director and Whole Time Director simultaneously.
CMA. CS. Sanjay Gupta
("PROUD TO BE AN INDIAN")
(114215 Points)
Replied 12 January 2012
The Question is can the Manager of a Company also be a director of that company?
And the answer is yes.
According to regulation 82(2) of Table A, a director may be appointed as manager or secretary However, this regulation is “Subject to the provisions of the Act.” Thus the power conferred on the Board by this regulation has to be exercised subject to the sub-section (1). Accordingly, a director may be appointed as secretary provided, however, that where the Board of directors of a company having the paid-up share capital prescribed for the purposes of section 383A, comprises only two directors, neither of them shall be appointed as the secretary.
Word of Caution: Do have a look at Regulation 83 of Table A---
Ankur Garg
(Company Secretary and Compliance Officer)
(114773 Points)
Replied 13 January 2012
| Originally posted by : pradeep | ||
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Extract of letter no- 8/16(1)/61 PR, dated 9-5-1961 : Director acting as Manager or Secretary.-If a Director of a company works in that company as a Manager and Secretary, then, in fact, he is the Managing Director of that company holding office of profit as a Secretary, but section 314 does not apply to a Managing Director. So, Special Resolution is not needed for his appointment as a Secretary. |
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This is a kind of misinterpretation of DCA clarification and this clarification cannot be applied to any position other then director appointing as CS of the company.
Let me share true meaning in the given context:
Appointment of director to the office of secretary
The Department has clarified that appointment of director of the company as company secretary, without any managerial power or vice versa shall not require approval of the Central Government. However, special resolution under section 314(1) to that effect is need to be passed if remuneration is in excess of the prescribed amount.
But no doubt very good effort by Pradeep ji.
Ankur Garg
(Company Secretary and Compliance Officer)
(114773 Points)
Replied 13 January 2012
Kindly appreciate Manager u/s 2(24) is “The Manager” responsible for the whole or substantially the whole of the affairs of the company.
In your case section 197A is not applicable bcoz it is applicable to 2 individual positions. Hence if by virtue of DCA clarification we treat the combo of Director + Manager = Managing Director then this resulting MD would be a deemed position. Ultimately there would be a Manager only u/s 269.
As per my understanding also there is no problem appointing director as manager of the company however I would not advise to appoint director as manager keeping in view the position [responsible for the whole or substantially the whole of the affairs of the company and equal to the position of MD] given to manager in companies act, 1956.
Appointing ordinary director as “the manager” u/s 2(24) may create future position conflict. This is my personal opinion based on my professional exp.
Regards
| Originally posted by : Ankur Garg | ||
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As per my understanding also there is no problem appointing director as manager of the company however I would not advise to appoint director as manager keeping in view the position [responsible for the whole or substantially the whole of the affairs of the company and equal to the position of MD] given to manager in companies act, 1956. |
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Ankur,
My query is if director is appointed as manager of company at remuneration of Rs. 1.00 Lacs then whether SR is to be passed u/s 314?
Whehter section 314 is applicable or not.
Regards,
Neha
CAclubindia
