Appointment of md of subsidiary as wtd in parent company

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

22 September 2011 X Ltd. is holding company and Y ltd. is its subsidiary. Mr. A is a Managing Director in Y ltd and is to be appointed as Whole time director in X ltd.
As much as I could find in the Act, there is no restriction nor any provision relating to this.
Pls opine how shall such an appointment be made.
Pls reply urgently

CS Suraj Arora

CS Suraj Arora (Expert)
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23 September 2011 Dear

Firstly i would like to bring in your kind notice the provisions of section 309(6)of the Act.

Now come to your query...if Mr.A is managing director of Y ltd and of any another company then his appointment as WTD in X ltd is not possible ...if you read scope of section 316 in Ramaiya book page No.3079...for your kind perusal it can be restated as follows:-
The object of this section is that the efficiency of a person who is managing a company should not be effected by his being in management of more than two companies.....

A director in charge or whole time director will for the purposes of this section be considered in the same position as a MD.

We can not go beyond the intention of this section by your way you can appoint WTD in ten companies as companies Act does not say or restrict like this..

So as conclusion , i suggest go for central Government approval if you want to appoint....

Querist : Anonymous

Querist : Anonymous (Querist)

23 September 2011 Thanks for your reply..

Pls re-read the said commentary in Ramaiya that u r referring to. The issue is that the appointment of any individual in 2 companies is possible. So I think that this also tantamounts to dual responsibility.

Again the qs which i wish to ask was whether the appointment is practically possible or not.

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CA Sumat Singhal

CA Sumat Singhal (Expert)
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29 September 2011 Sir,
there is no restriction in companies act regarding appointment of MD in two companies (sec 316). only unanimous resolution is required to be passed by the Board in such case and appointment in more than two company requires approval of central Govt.
Kindly let me know whether this solution has solved your query.
Regards,
CS Sumat Singhal