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Ankur Garg (Company Secretary and Compliance Officer)     04 June 2013

Re-appointment of managing director_statutory overview

Dear professional Colleagues,

 

Re-appointment of Managing Director in a Public company is a common topic for professionals as they need to handle it frequently.

 

Let’s discuss the provisions of Re-appointment of Managing Director in an unlisted Public company along with statutory timelines and ROC reporting formalities.

 

PROVISION

 

Re-appointment of Managing Director in a public company can be done by board meeting resolution subject to the approval of shareholders in a General Meeting.

 

For example if the term of Managing Director expires on 31.03.2013, then there is no need to worry at all. All we need to do is to simply pass a board resolution for re-appointment before 31.03.2013 subject to the approval of members in the general meeting and confirm the MD appointment in next General Meeting held immediately after his/her appointment by the board.

 

In respect of the re-appointment of MD above, file all the necessary ROC forms (form 23 and form 25C) from the date of board resolution. Nothing is to be filed with ROC after confirmation of the MD appointment by the shareholders in the General Meeting as far as re-appointment of Managing Director is concerned.

 

As per DCA clarification the above practice is very much possible. Find below the extract of DCA clarification:

 

As per circular number 2/94 dated 10 February 1994— Managing Director may initially be appointed by a board resolution subject to the approval of members in the general meeting and such approval may be obtained in the first general meeting of the company held immediately after his appointment by the board.

 

Note: Remember one thing retrospective re-appointment of Managing Director is not possible due to section 317 hence passing of Board Resolution subject to the approval of members before 31.03.2013 is mandatory.

 

Retrospective re-appointment of MD not possible u/s 317

 

Appreciate further Section 317 has provide us ample time to initiate and conclude the formalities for re-appointment of MD, before the actual expiry of MD’s present tenure and that is why retrospective re-appointment of Managing Director is not possible under section 317.  

 

E-FORM FILING WITH ROC:

 

1. Form-25C/25A, as the case may be, under section 269 within 90 days from the date of passing of board resolution.

 

2. Form-23 under section 192(4)(c) within 30 days of passing board resolution.

 

Note: Form-32 is not required in case of re-appointment of Managing Director as there is no change composition in board of directors involved.

 

I hope this brief write up would be of some help in your professional working.

 

 

Best Regards

Ankur



 27 Replies

Ayyswariya RG

Ayyswariya RG (Knowledge Seeker)     04 June 2013

Very Crisp and informative. Thanks a lot sir. yes

Ankur Garg

Ankur Garg (Company Secretary and Compliance Officer)     04 June 2013

I have tried my best to keep it crisp keeping in view the interest of students especially CS and CA Final Students. Above note is equally important from exam point of view as one can easily face a practical problem on the same.

 

Also find enclosed herewith my handout on Appointment of Managerial Personnel for detailed understanding and clarity.


Attached File : 132189 1182063 appointment of managerial personnel.pdf downloaded: 326 times
6 Like
Sneha

Sneha (Company Secretary)     04 June 2013

Sir, thank u for this article. But I want to ask one thing that when the appointment is subject to approval of shareholders then why we file Form 23 and Form 25C within 30days/90days from the date of BM.

 

If BM for appointment is held on 31.03.2013 and GM is held in July. So in this case Form 25C is filed before seeking shareholders approval for the same.

Ankur Garg

Ankur Garg (Company Secretary and Compliance Officer)     04 June 2013

Hi Sneha,

 

This is by virtue of DCA clarification quoted in the post itself. DCA is of the view that approval of shareholder would be of confirmatory nature. Further as per section 2(26) board is one of the primary authority/method to appoint MD.

 

Further even if shareholder confirms the appointment in July, date of appointment would always be from April 01 for ROC E-form purpose. So one should file e-forms without undue delay.

1 Like
Vandana Mulchandani

Vandana Mulchandani (Finance Manager )     04 June 2013

Thank you Ankur Sir...very much informative and useful, easily understandable.

Sneha

Sneha (Company Secretary)     04 June 2013

Thank you for the clarification of the same. Further I want to ask what is the penalty for violation of Sec 269 (1) ??

CA Deepesh Ruhela

CA Deepesh Ruhela (Keen to Learn)     04 June 2013

Thanks a lot sir...

CA Mansi Kotecha

CA Mansi Kotecha (Keep Smiling !!)     04 June 2013

Thnk u Ankur sir..

 It would be really very useful !!

CS Ankur Srivastava

CS Ankur Srivastava (Company Secretary & Compliance Officer)     04 June 2013

Thanks for sharing Ankur ji.... after long time you are again active on Corporate law section.....

 

CS Ankur Srivastava

CS Ankur Srivastava (Company Secretary & Compliance Officer)     04 June 2013

Originally posted by : Sneha

Sir, thank u for this article. But I want to ask one thing that when the appointment is subject to approval of shareholders then why we file Form 23 and Form 25C within 30days/90days from the date of BM.

 

If BM for appointment is held on 31.03.2013 and GM is held in July. So in this case Form 25C is filed before seeking shareholders approval for the same.

 

Sneha ji,

 

The Board make the appointment by way of passing Board Resolution which is subject to the approval of shareholders. HOwever, actually the appointment took place w.e.f. the date mentioned in the Board Resolution.

 

Form 23 is to be filed under section 192(4)(c).

 

Form 25C is to be filed under section 269 within 90 days from the date of appointment.

 



 

1 Like

(Guest)

bookmarked...!! Thanks for sharing sir...

Hardik Dave

Hardik Dave (IPCC and CS Professional(FINAL) Student)     04 June 2013

Realy important .smile. Thanku for sharing Ankur Sir,
Rohit Aggarwal

Rohit Aggarwal (ACA Bcom (H) MBA MCom)     05 June 2013

Thank you Ankur Sir for providing such a relevant information. Keep Sharing.

 

Thanks.

CA Srikanth Yadav

CA Srikanth Yadav (Chartered Accountant)     05 June 2013

Thank you very much! Very informative and written in a lucid style. Awesome.....


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