Process of Appointment of Additional Director (AD) as well as Managing Director (MD) - Series 392
Process of Appointment of
Additional Director (AD) as well as
Managing Director (MD)
In this editorial author shall discuss
the process and provision of appointment of a person as Additional Director as well
as Managing Director in Board Meeting. For this purpose Companies have to
comply with Following Sections:
1. 161(1) Appointment of
Additional Director
2.
196 Appointment of Managing Director
3. 170(2) Filing of Form
for Appointment of Director
Many times professionals
asked questions about “Whether an additional director can appoint as MD?” If
yes, what shall be term of appointment of such MD etc.
As per Companies Act, 2013 Section
152, Power of appointment of Director vested with Shareholder of Company by
passing of resolution in General Meeting. However, as per Section 161(1), if
power is given in AOA then Board of Directors can appoint director of the
Company with some conditions.
There are three concepts for Director:
·
Director
[Section 152]
·
Additional
Director [Section 161(1)]
·
Managing
Director [Section 192]
Additional Director:
As per 161(1), additional Director has all the liabilities,
responsibilities, powers etc same as director appointed in Section 152. Only
difference between director appointed in 152 & 161(1) is that;
· Additional Director appointed in 161(1), shall
hold office only up to upcoming Annual General Meeting of Company. His term of
appointment shall be up to upcoming Annual General Meeting.
· Director appointed u/s 152 doesn’t have any such
term of appointment. Person appointed as director in 152 his term doesn’t
expire on Annual General Meeting.
Provisions
in relation to Additional Director Appointment:
· ·
Additional Director can be appointing by Board
of Directors.
·
Additional Director can be appointed in Physical
or Video Conferencing Board Meeting as well as Circular Resolution.
·
Term of additional Director shall be up to next
Annual General Meeting
· Additional
Director can be regularized in any general Meeting after appointment in Board
Meeting.
· Company
shall file DIR-12 within 30 days of passing of Board Resolution.
· If
additional director not regularized in AGM his tenure cease on the date of AGM.
· After
cessation company is required to file e-form DIR-125
Managing Director:
To become Managing Director a person should be Director
(whether additional or normal Director). As per 196(4), MD shall be appoint by
Board of Director in their Meeting subject to approval of shareholder
resolution in at the next general meeting.
· MD
appointment can be done by General Meeting. But till general meeting from board
meeting a person can continue as MD without approval of General Meeting.
Therefore, one can opine that additional Director can be appoint as MD
also in same board meeting subject to approval of General Meeting.
Provisions
in relation to Managing Director Appointment:
·
Managing Director shall be appointed by Board of
Directors in their meeting only.
·
MD can’t appoint by Circular Resolution.
· AD appointed as MD in same board meeting
required to regularize in upcoming Annual General Meeting and required approval
of Shareholder to continue as MD.
· If AD not
regularized in upcoming AGM then tenure of person as MD shall also ceased.
· Company need to file MGT-14 within 30 days of
Board Meeting as Managing Director and executive Director.
Process
Appointment of Additional
Director as well as MD in Board Meeting:
I.
The person going to appoint as AD as well as MD must
having DIN.
II. Hold Board
Meeting and pass two resolutions:
·
Appointment of person as Additional Director
·
Designate such AD as Managing Director.
III. File e-form
DIR-12 within 30 days of passing of Board Resolution for appointment as Managing
Director.
IV. In the Notice
of Annual General Meeting, mention a resolution regularizing of such person and
continue such person as Managing Director.
V. Pass ordinary
resolution in AGM to continue appointment of such person as Managing Director.
VI. MCA site
shall not allow to file DIR-12 for the resolution passed in general Meeting as DIR-12
as designation MD has already beenfiled.
(Author – CS Divesh Goyal, GOYAL DIVESH & ASSOCIATES Company
Secretary in Practice from Delhi and can be contacted at
csdiveshgoyal@gmail.com) Disclaimer: The entire contents of this document have
been prepared on the basis of relevant provisions and as per the information
existing at the time of the preparation. Though utmost efforts has made to
provide authentic information, it is suggested that to have better
understanding kindly cross-check the relevant sections, rules under the
Companies Act, 2013. The observations of the author are personal view and the authors do not take
responsibility of the same and this cannot be quoted before any authority
without the written
Whether is it required to file mr-1 for md appointment?
ReplyDeleteYes, for MD, WTD or Manager they have to file it within 60 days of the appointment.
DeleteRefer Rule 3 of The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014.
whether 2 DIR 12 needs to b filed. 1 for AD and 1 for MD because the section says that MD should be director. So, how can the candidate be directly appointed as MD without filing Dir 12 as AD
ReplyDeletesir is it possible that in case of casual vacancy a person appointed could be appointed as director in board meeting.
ReplyDeleteGreat share!
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