The head of our finance department has been designated as "Director- Finance" even though is not a member of the Board of Directors of the Company. He also signs the balance sheet and the profit & loss account of the company along with two directors and the company secretary.
In this regard, is it fair (legally or otherwise) to designate the employee as "Director- Finance" even though he is not a member of the Board?
Secondly, can the Board pass a resolution authorising him to sign the balance sheet and the profit and loss account along with other directors? What would be the legal implications of this practice.
10 April 2010
According to me you can designate him as director-finance for your internal management. But as he is not a member of board he can not sign the balance sheet for sure. As desired by section 215 director who is a member of board can sign the BS along with CS.
Further if 2 director and a CS is signing the BS than there is no need to get the BS signed by your dir-finance.
10 April 2010
Thank you very much for your answer.The problem is that he (Director-Finance) signs/authenticate the documents which are required to be signed by the directors (for example, certified true copies of Board Resolution etc.). Since he signs as Director-Finance, the outside parties mis-understood the documents as signed by the Board Member. In my opinion, he should not sign any documents sent to outside parties (like banks etc.)
Kindly give your views.
By the way, is there any circular from Department of Company Affairs suggesting that an employee who is not a member of Board should not be given designation containing the word "Director" ?
10 April 2010
If the employee designated as "Director- Finance" even though he is not a member of the Board than it may fall under "Deemed to be Director of the Company" under Explanation (1) of Section 303(1)if Board acts in accordance with his instructions or he holds himself as Director by signing the Balance sheet as 'Director- Finance'
For signing part, he can continue to Sign IN ADDITION TO BOARD OF DIRECTOR AND CS thus complining with Sec 215. But do not use designation as Director.
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