As I have great regards for all of yours high-skilled knowledge on company & corporate laws matters, I have to request that would you please advice VERY URGENTLY on the following:
In a Board meeting of M/s ABC Co. held at its registered office at New Delhi on the 15th June 2010. Present : Mr. XYZ, & Four Others.
The following resolutions were passed in the above said meeting:
1. Mr. XYZ was elected as the Chairman-cum-Managing Director of the company for life or till he decides to resign as CMD.
2. The Management Control of the company will remain with Mr. XYZ till he continue as CMD and thereafter CMD will be appointed as per the Shareholder Agreement.
3. The share holding pattern of the company will be as follows:
Mr. XYZ and his nominee/s 30 %
Mr. LLM 10 %
Mr. LOP 15 %
Mr. JKL 15 %
Mr. ATC 30 %
Mr. JDH NIL
4. M/s ABC Co., US to be a wholly owned ( 100% ) subsidiary of M/s ABC Co. Mr. XYZ will act as President and CEO of the M/s M/s ABC Co., US.
5. The total number of shares of the US subsidiary company are 1500 shares with a face value of 1$ / per share.
6. 1400 shares will be allotted to M/s ABC Co. and balance 100 shares will be allotted to Mr. XYZ with an understanding that Mr. XYZ will transfer back these shares (100 shares in his personal name) at the same face value of 1 $ / per share at the time of his resignation from the present post of CMD of M/s ABC Co.). Mr. XYZ to execute an agreement for the same with M/s ABC Co., separately. On his resignation the 100 share will be transferred to new CMD.
7. The respective earnings of the 100 shares held by Mr. XYZ individually in the US Company shall be treated as the earnings of M/s ABC Co. Proposed Share-holders agreement to be executed by mid-July 2010.
8. Mr. XYZ to complete his share of investment in proportion to his shareholding in the company immediately upon the signing of the Share-holder’s Agreement (SHA).
Please URGENTLY advice Whether above Board Resolution is valid and secondly, Whether Mr. XYZ can be appointed for life as CMD and/or he may choose to be remain to be CMD by virtue of SHA until he so desires otherwise. Does it violate the Companies Act or any other laws as such.
1. First item is vaild if ABC is a private Company. If ABC is public Company, XYZ can be appointed as MD only for 5 years at a time, which can be renewied for furter 5 years every time, by shareholders resolution
2. Also for 2nd item if there Company is public, XYZ will vacate office after the expiry of 5 years and also his appoint with be subject to members approval
3. if ABC is wholly owened subsidiary than its better that instead of XYZ and his nominees to be member of 30 % holding, let 30 % be hold by XYZ with ABC Co jointly, as a secured transaction. If in future, XYZ denies transfer than ABC with be equally be a memebr.
In case of Public Company, forms need to be filed with ROC.
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