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Whole time director

Sanjiv Kothari (partner) (27 Points)

01 May 2013

Can an individual be appointed as whole tome director in two Company (Unlisted Cos.) and get remuneration from both the Cos.

Regards

CA Sanjiv

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17 Replies

CS MOHIT SALUJA (PRACTICING CS Jalandhar 9914558709) (5155 Points)
Replied 01 May 2013

No an individual can not be appointed as the Whole Time Director in two companies. As per the explanation under section 269 of the Act, a whole-time director includes a director in the whole-time employment of the company. In other words, a director who devotes his whole time to the affairs of a company is called a whole-time director of the company. A whole-time director of a company cannot accept the position of a whole-time director in other companies, though he may accept office of non-whole-time director in other companies subject to the limits imposed by section 275 read with sections 277 and 278.

Pawan Mittal (CA Final) (702 Points)
Replied 04 May 2013

Dear Sanjiv

I don't agree with the answer given by Mr. Mohit. There is no specific provision in the companies act which prohibits a person to act as whole time director of more than two companies.

Section 269 is just an explanation of Whole Time Director.

You can also see in the real world, in many group companies the same person is Whole Time Director of more than one companies.

As far as Form-32, or e-filing is concerned, no problem at all. In ROC system, a person can be reflected as WTD of more than one company.

Sneha (Company Secretary) (1594 Points)
Replied 04 May 2013

Originally posted by : MOHIT SALUJA
	No an individual can not be appointed as the Whole Time Director in two companies. As per the explanation under section 269 of the Act, a whole-time director includes a director in the whole-time employment of the company. In other words, a director who devotes his whole time to the affairs of a company is called a whole-time director of the company. A whole-time director of a company cannot accept the position of a whole-time director in other companies, though he may accept office of non-whole-time director in other companies subject to the limits imposed by section 275 read with sections 277 and 278.

I agree with this..

CS MOHIT SALUJA (PRACTICING CS Jalandhar 9914558709) (5155 Points)
Replied 04 May 2013

Dear Pawan, as you are saying that in many group companies, a person is appointed as Whole Time Director, then that is absolutely wrong. Just by the check of status of a person how can you say that reply i have given above is wrong. There are a no. of additional directors as shown over MCA portal of many companies. does it mean that a peson can be appointed as additional director for life time..no dear..the tenure of additional director expire on AGM date but many company do not file form 32 in rerspect of their change in designation from additional director to director. then does not it mean k additional directoris appointed for life time. it is the mistake on part of companies that they do not file form 32.

Hence at end i can say only that a person cannot be appointed as whole time director in more than one companies.

Pawan Mittal (CA Final) (702 Points)
Replied 04 May 2013

Respected Mohit Sir,

I agree with the arguments given by you that if one company is not complying with the provisions that doesn't mean that others are free to violate the law.

But what I want to say is, there is no specific provision in the companies Act which restricts a person to be appointed as Whole Time Director of more than one Company.

Section 269 is just a definition of whole time director.

CS MOHIT SALUJA (PRACTICING CS Jalandhar 9914558709) (5155 Points)
Replied 08 May 2013

Dear Pawan, you are right that section 269 gives just the definition of the whole time director. and you se if the defiunition is itself clear that a whole time director means a director who is in full time employement of the company, then how can he be employed some where else. Yeah, he can act as Directo/ Managing Director of some other company but not the whole time director.

And see if these are not any specific provisions given in the act of any particular thing, then we have to go to the explanations and the judgements. Heere is teh jusgement of Bombay High Court [Ramaben A Thanawala v Jyoti Ltd. (1957)] that the expression Whole Time Director must refer to a director who spends all his time in management of the company in the same sence as a managerial director does though he may accept the office of non-whole-time-director in other companies subject to the limits impossed by the section 275 read with section 277 and 278

Ankur Garg (Company Secretary and Compliance Officer) (114773 Points)
Replied 08 May 2013

No doubt about the observation of Mr. Mohit. It is bang on.

One should note the point that this two liner tiny explanation to Section 269 has much influence than the entire section 269.

Explanation to Section 269, is a kind of research topic and route cause of many critical DCA clarifications and contain deep interpretation of law related to the appointment of Managerial Personnel.

Thanks

Ankur

Pawan Mittal (CA Final) (702 Points)
Replied 08 May 2013

But Mohit Sir the case law given by you is related to a public company moreover I am unable to find the words that "one person cannot be appointed whole time director of more than one companies".

CS MOHIT SALUJA (PRACTICING CS Jalandhar 9914558709) (5155 Points)
Replied 08 May 2013

The case law i have discussed has noting to do with the private or public dear Pawan. I think i can not elaborate more than this except giving the definition/ case law/ explanation. You must even think that if a person is doing employement and devoting full time in a company , how can he work symulaneously in other company also, except in the overtime done by him in other company. so i can not give eplanation more than this dear Pawan. Please let me know any case/ explanation if some where is given that a person can b appoiinted as whole time director in two company, if you have.

Harvinder kumar (Company Secretary ) (195 Points)
Replied 23 May 2013

Dear Members,

My query is connected with your sincere debate. If a person who is already appointed as WTD in a private limited company and drawing a salary, then he can be appointed in public limited company as WTD on a remuneration simultaneously?

Look forward to your reply...

Sonakshi Bhargava (Assistant Company Secretary) (113 Points)
Replied 23 May 2013

A person cannot act as a whole time Director in two companies, he can be appointed as WTD only in one Company.

Now in your query, if a person is already a WTD in Pvt Comp. he cannot be appointed as WTD in any other Company

Ankit Patniya (Assistant Company Secretary) (124 Points)
Replied 28 March 2014

Dear All,

I read this discusion when I was comparing the provion of New and Old Act. Now its clear that a person can be appointed as WTD in more than 2 Companies if and only if other companies are subsidiaries.

Even in old act one can be WTD in more than 2 companies, provided there should be clear distiction between (i)"enturested with substantial power of mangagement" (than he may be regardes as MD, by virtue of the phase in MD's old defining "by what ever name he may called" and (ii) delegation of authority to manage the day to day affairs of the Company(than he shall be ETD only).

With regards,

Ankit