Appointment of managing director

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

21 November 2011 Ours is a government public company. Board has appointed Mr. A as Managing Director in its Board Meeting subject to the consent form shareholders. Next day of the appointment a complaint was registered in lokayuk against Mr. A, consequent to which chairman has not issued the appointment letter to Mr. A and Form No.32 was also not filed for his appointment. Meanwhile Chairman of our company by issuing a office order has given the charge of the company to another director till the clearance from the lokayut and board later on in its meeting decided to withhold his appointment till clearance from lokayukt.

Now Mr. A is claiming that as the board has appointed him as Managing Director though appointment letter was not issued to him (also not joined the office) and form 32 not filed this are all formalities and he is MD of the company.

Now my question is as per the provisions of companies act, whether a person becomes a MD as soon as appointed by the board even without intimating to him about his appointment and filing of form 32. Whether the action taken by the board to withhold his appointment after appointing his as MD is valid.

RG - A Helping Hand

RG - A Helping Hand (Expert)
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22 November 2011 As per my understanding everything is very clear in your case and contention of the Chairman is valid by withholding the appointment of MD in the light of Lokayukt investigation.

Further ROC filing is also pending. A person cannot becomes MD as soon as appointed by the board without intimating to him about his appointment and filing of form 32.

On safer side do one thing. Hold a formal board meeting and invite Lokayukt as special invitee. Discuss everything and pass a board resolution for suppression of earlier resolution and cover everything in the board minutes.

RG