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MD

CA. Prabudh Sharma (CA) (83 Points)

29 June 2010

A person is a MD of 2 pvt cos. and 1 public co. can he be appointed as MD of another PUBLIC co.?

A person is a MD of 2 pvt cos. and 2 public co. can he be appointed as MD of another PRIVATE co.?

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4 Replies

Ankur Garg (Company Secretary and Compliance Officer) (114773 Points)
Replied 29 June 2010

Yes the person can be appointed as MD of more than 2 companies subject to the approval of CG u/s 316.

Kindly refer section 316(4):

(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

Nitin Grover (CS) (1228 Points)
Replied 29 June 2010

Dear Prabudh

yes he can become in both cases

in First Case Approval from all directors (of appointing company) and C.G is required

In second case only approval from all directors is needed (of appointing company)

Regards

CA. Prabudh Sharma (CA) (83 Points)
Replied 29 June 2010

Thanx, I understood that correctly.

Just to clear my doubts pl. confirm

1. Now referring to only the first case - proposed appointment in public co.)

But if the new appointing public co. is a totally different co. ie its not a group co. of any of the cos. in which he is MD at present (viz. 2pvt or 1Pub co.), in that case even CG won't approve u/s 316 (4) and hence he would not be able to be appointed.

2. Supposing that there are 2 public cos. proposing his appointment as MD at the same time. These 2 public cos. & one of the pvt cos. in which he exists as MD belong to the same group. In this case we should be able to appoint the MD u/s 316 (4) after CG approval. Even though the total no. of cos. in which he shall be MD become 5 or even more. The provisions of 316(4) are meant for such cases only - I think..

This way atleast theoritically a person can be MD in any no. of cos.

Nitin Grover (CS) (1228 Points)
Replied 29 June 2010

Dear Friend

In first case Approval is must if CG disapproved you can not appoint him as a MD

In Second Case no need of approval from C.G because this section is not applicable on purely Private Company. So, No need of approval. Even if he is MD in 14 companies and you are appointing him/her as a MD in 15th company which is Purely pvt ltd then also no need to take approval from CG.

Regards