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Who can be appointed as MD of a Private Company?

Aishwarya Sitharam (CA Final, 1st year LLB) (45 Points)

22 September 2010

A MNC has appointed a person the Head of the Office to run the day to day business of the office in India. In many cases, this person has not received any “official” authority or has not been appointed as a managing director.

1. What is his/her responsibility and liability?

2. Can he be considered as a “de facto” managing director?

3. Can we consider that he has the authority to represent and bind the Company because of his function?

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6 Replies

vivek (CS) (751 Points)
Replied 22 September 2010

Upto my understanding;

1. The said Gentelman is not personally liable for the acts done.

2. He can not be treated as "De facto" Managing Director.

3. He can be held liable for the acts done by him under the Contract Act (he is the agent of the company).

I don't think that he is covered under Section 5 of the Companies Act, 1956.

Others views solicited.

Regards,

(Guest)

Any person can function or use the designation of an MD only after being appointed as such by resolution in Meeting.

Pls find attached checklist for appointment of a MD

Attached File : 33 checklist for appointment of md.doc downloaded: 233 times

Aishwarya Sitharam (CA Final, 1st year LLB) (45 Points)
Replied 22 September 2010

Thanks for your quick replies. I would like to know whether the appointment checklist provided is applicable for a private Company

nidhigoel89 (Company Secretary ) (594 Points)
Replied 22 September 2010

Hey!

Sec 269 and the Schedule XIII does not apply to pvt. co. so in your case(In Pvt. Co.) only form 23 and form 32 is sufficient.

Ajay Mishra (Company Secretary) (74332 Points)
Replied 22 September 2010

Dear Friend,

As per your query, such person is appointed as head of the office not head of the company. He can not be treated “as de facto” Managing Director.

If a company wanted to appoint a person as MD of the Company nor for office, the pre condition is he should be director of the company.

In your case, the provisions of appointment of MD will not apply.

Regards

CS Ajay Mishra

C.A. Prasad Bhumkar (prop) (52 Points)
Replied 23 September 2010

hi...the person appointed as head of the office cannot be called as MD of the company..you can call him as office incharge or Branch manager.and not MD.