Managing director & executive director

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Querist : Anonymous

Querist : Anonymous (Querist)

25 July 2014 Can You please define Executive Director and Non Executive Director and if a managing Director not withdrawing any salary then also he comes under definition of Executive Director.

CS Mitesh Mehta

CS Mitesh Mehta (Expert)
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25 July 2014 Executive director is that person of a company, who is assigned with the overall charge and operation of some department of the company. While on the other hand, a non-executive Director has no part to play in the operational field of the company. However, he enjoys the same position in the Board in the decision making process, as the executive directors have. His role is limited to participation in the Board level meetings only for which he is paid a per meeting fee, while the executive director executes his assigned functions on day to day basis as a salaried employee of the company for which he gets monthly salary and other benefits, as fixed by the Board.

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Querist : Anonymous

Querist : Anonymous (Querist)

25 July 2014 Where a Managing Director not withdrawing any salary from company also be said as Executive Director but managing affairs of the company

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Asha Kanta Sharma

Asha Kanta Sharma

(Expert)
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03 August 2024 Sure, I can provide definitions and clarify the distinctions between Managing Directors, Executive Directors, and Non-Executive Directors. Here's a detailed explanation:

### **1. Definitions:**

#### **Managing Director (MD):**
- **Definition:** The Managing Director is a senior executive appointed by the Board of Directors to manage the day-to-day operations and affairs of the company. The MD typically has extensive authority and responsibility for the company’s operations and strategy.
- **Key Responsibilities:**
- Overseeing the implementation of company policies and decisions.
- Managing the company’s overall operations.
- Representing the company in various dealings.
- **Remuneration:** The MD may or may not draw a salary, but their role is critical to the management and strategic direction of the company.

#### **Executive Director:**
- **Definition:** An Executive Director is a member of the Board who is actively involved in the day-to-day operations and management of the company. They are typically full-time employees of the company and receive remuneration for their services.
- **Key Responsibilities:**
- Direct involvement in the company's operational and strategic decisions.
- Managing specific departments or functions within the company.
- **Remuneration:** Executive Directors receive a salary and other benefits for their role in managing the company.

#### **Non-Executive Director:**
- **Definition:** A Non-Executive Director is a member of the Board who is not involved in the day-to-day operations of the company. They provide independent oversight and guidance but do not engage in the daily management of the business.
- **Key Responsibilities:**
- Monitoring and evaluating the performance of the company and its management.
- Providing independent judgment on corporate matters.
- Ensuring proper governance and compliance.
- **Remuneration:** Non-Executive Directors receive compensation for their board duties, typically in the form of a fee, but do not receive a salary related to company management.

### **2. Managing Director with No Salary:**

- **Managing Director Role Without Salary:**
- If a Managing Director is not withdrawing any salary, they are still considered the Managing Director if they are performing the role and responsibilities associated with that position. Their title and role are defined by their appointment and responsibilities, not by the receipt of a salary.
- Even without a salary, they are actively involved in managing the affairs of the company and have authority as defined in their appointment.

- **Executive Director Role:**
- An Executive Director is defined by their involvement in the day-to-day management of the company. If a Managing Director is not drawing a salary but is managing the company’s affairs, they would still be considered an Executive Director in terms of their role and function.
- The term "Executive Director" is more about the functional role and involvement in management rather than just remuneration.

### **Summary:**

- **Managing Director:** Typically responsible for overall management and strategy, may or may not draw a salary.
- **Executive Director:** Actively involved in daily operations and management, usually receives a salary.
- **Non-Executive Director:** Provides oversight without engaging in day-to-day management, typically compensated with a fee.

Even if a Managing Director is not drawing a salary, they still fulfill the role of managing and directing the company's operations and thus would be considered an Executive Director by virtue of their active management role.