12 April 2011
Many companies designate their executives as ED, Director, Sr. Director, etc. without actually inducting them in the Board.
Such practices, no doubt, create confusion and are not healthy. I have even come accross a MCA circular restricting usage of such designation for the executives who are not on Board.
However, there is no statutory provision and hence the practice is continuing.
A person to be a "Director" must be appointed by the Board by way of a Resolution and his appointment has to be approved by the members in General Meeting. Form 32 needs to be filed.
Just designating an executive as ED will not make him a member of the Board.
CAclubindia
