Appointment of managing director in a governmnet company

This query is : Open

Querist : Anonymous

Querist : Anonymous (Querist)

17 November 2011 In case of a public company in which state government is major shareholder, state government by an order appointed a person as Managing Director. but some of the directors have raised objection that government can not directely appoint any one as managing director only the board of directors have the right to appoint managing director.

my question is whether state government has the authority to appint Managing Director without the consent of board. if there is any notification or circular in this regard kindly refer. I think section 269 and schedule XIII is not applicable in case of government companies.

In case govt does not have authority to appoint MD and board has not consented to his appointment what will be the validity of work done by him during the period of his appointment by government order and board meeting.

CS Bijoy

CS Bijoy (Expert)
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21 November 2011 Board can not have authority to appoint MD if done by Board than confirmation need to obtained from the Shareholder.
In the above case if the objecting shareholder holding one tenth of share than they can make complain under Section 397, 398 to CLB for rectification.

Querist : Anonymous

Querist : Anonymous (Querist)

21 November 2011 As per the procedure prescribed in the companies act for the aapointment of MD first board appoints the MD and then approval of the shareholders is taken.

my question was that whether government companies are exepted from following the above pocedure and in such companies MD can be appointed directly by Governemt.

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