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MD - reappointment

CS Snehal (Compliance Manager) (346 Points)

18 March 2010

Dear All,

Please answer the following query
Our MD's tenure expires on 31.3.2010. We are going to reappoint him via a circular resolution before march 31, 2010.

Now there are 2 aspects to my query:
1: Can we pass only the resolution for appointment without the remuneration aspect involved in it? And later hold the remuneration committee meeting some where in mid april and retrospectively increase his remuneration from 1.4.2010.
If yes, then any documentary evidence for the same. How to proceed for the same.
Please pass on the resolution is any with you.

OR
2. is it necessary to pass circular resolution with the remuneration mentioned in it?

The query is urgent please reply.

Regards,
Snehal

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11 Replies

Rasesh (CS CWA MBA (Fin) B.Com LL.B (Spl)) (6501 Points)
Replied 19 March 2010

Re-appt of MD is as good as appointing a MD. The Secretarial Standards issued by ICSI recommends that appt of MD should not be done by way of circular resolution.

Notwithstanding the above, the resolution of the board should have atleast the max salary and the perq structure for the MD which may be finalised by the remuneration committee. Till the time, the remuneration committee does not fix the salary, no remuneration should be paid to the MD.

Post the resolution of the remuneration committee, get the same approved by the Board and subsequently by the members. I presume that the limits of sch XIII would be maintained.

1 Like

CS Snehal (Compliance Manager) (346 Points)
Replied 19 March 2010

As per the Sec Stds, I did read what you have mentioned. But nowhere in the law it says that circular resolution cannot be passed for the same. It is an emergency situation, hence we have to do it via circular resolution. The remuneration committee meeting shall be scheduled somewhere in 2/3rd week of April. Hence the salary or remuneration will be paid post that only. Also, As he is tenure of re-appointment starts on 1.4.2010, The salary of March comes before this. Hence no question of time lag of salary.

Also, may be on the same day, the Board meeting is also scheduled as the remuneration committee. Hence, Board can ratify the same.

Yes, Schedule XIII is maintained.

Also, would like help from you, if you could provide me with a draft of the resolution wherein the salary would be taken up later in the remuneration committee and only his appointment is done via circular resolution.

Thanks

Ankur Garg (Company Secretary and Compliance Officer) (114773 Points)
Replied 19 March 2010

Dear Snehal,

I am facing the same situation as my MD's tenure also expires on 31.3.2010. But we are not going for the circular resolution as my BM scheduled to be held on 29 March to pass board resolution. Just finished the agenda work yesterday and planning to forward the same to board members tomorrow.

Also in my case CG approval for remuneration expires on 31.03.2010. So in your case simply pass the circular resolution to re-appoint MD subject to shareholders’ approval and confirm the appointment in next GM. File all the necessary ROC forms from the date of board resolution. Nothing to be filed after GM confirmation as far as re-appoint of MD is concerned.

Simply start the process of remuneration in the next FY like you are planning. For remuneration first pass the committee resolution and forward the proposal to board for consideration. Next pass the board resolution subject to the approval of members in GM. Finally pass the members resolution in GM. Kindly analyse my reply as per your case and re draft your doubts, if any. Hope this suggestions wouuld be off some help to you.

Best Regards

Ankur Garg (Company Secretary and Compliance Officer) (114773 Points)
Replied 19 March 2010

You may go for circular resolution as secretarial standards are not mandatory. Further appointment of MD by retrospective effect is not possible in view of section 317.

On the other hand you may pay the remuneration to MD retrospectively after CG approval.

1 Like

CS Snehal (Compliance Manager) (346 Points)
Replied 19 March 2010

Thanks Ankur,

We had a plan of Board Meeting but there isnt going to be one now hence the question of circular resolution.

Also confirm the forms need to be filed within the time limits as prescribed from the date of Board resolution or from the date of appointment.

That is Hypothetically taking dates:

If circular resolution is passed on 25.3.2010
Date of appointment: 1.4.2010
Date of Board Meeting in which the resolution is noted / ratified - 20.4.2010.

Then from which date does the time limit start.

Please clarify.

Thanks.

Ankur Garg (Company Secretary and Compliance Officer) (114773 Points)
Replied 23 March 2010

Form-25C/25A u/s 269 within 90 days as the case may be from the date of 25.03.2010.

Form-23 u/s 192 within 30 days of 25.03.2010.

Form-32 is not required.

CS Snehal (Compliance Manager) (346 Points)
Replied 24 March 2010

Ankur,

In appointment / re-appoint ment of MD the clause clearly says form 23 within 30 days from the date of appointment and like wise form 25C within 90 days from the date of appointment. (As read from Ramaiya)

Hence I would feel that as the MD is getting re-appointed from 1.4.2010, then 30 & 90 days count shall start from 1.4.2010.

Give your views.

Ankur Garg (Company Secretary and Compliance Officer) (114773 Points)
Replied 24 March 2010

Well I don’t think so. Reason being language of form-25C. There are 2 fields in form 25C.

1. Date of BOD resolution

2. Effective date of resolution

So as per my opinion you should file the form within 90 days of BOD resolution coz you are mentioning the Effective date of resolution separately.

Regards

CS Snehal (Compliance Manager) (346 Points)
Replied 24 March 2010

I agree as per form 25C, but the counting of days shall start from date of appointment I still believe.

What about form 23.

We shall try to file within the requisite time limit of the date of circular resolution

Ankur Garg (Company Secretary and Compliance Officer) (114773 Points)
Replied 24 March 2010

Form-23 is just to register your resolution for appointment u/s 192 and nothing else. Further form-23 can not change/overrule form-25C which is the specific form for appointment. However this is my personal thinking which needs to be verify at your end. Actually me and my team is a bit aggressive regarding ROC compliances as "ROC hamara kuch nahi bigad sakta" as long as we kept ourselves within four corners of law.

Seema (Asst. CS) (21 Points)
Replied 31 July 2012

Hi,

I would like to know that within how much time we should take members approval, is there any time limit prescribed for holding AGM if yes, then under which section.