Reappointment of Managing Director

This query is : Resolved

CS Ashish Jain (Querist)
Follow

06 December 2010 A ltd. company is a public company. Company has appointed MD in the board meeting held on 27.12.2004. As per section 317 of the Companies Act, 1956 MD can be appointed for a maximum period of 5 years at a time.

But at the expiry of his tenure of 5 years he was not reappointed and he continued working till date as MD.

So now what options are available with the company. How they can rectify their mistake. If they reappoint the MD from the current date what will be the consequences as he worked as MD even after the expiry of his tenure. What will be the validity of the work done by MD after the expiry of his tenure.

udit sharma

udit sharma (Expert)
Follow

06 December 2010 Pursuant to the provisions of section 290 of the Companies Act, 1956 all the acts done by the MD be completely valid in the eyes of the Law from the date of termination of his appointment till the date the same is brought to the notice of the Company. The acts done by the MD even after the notice of his termination as MD has been brought to the notice of the Company, will not be treated as valid in the eyes of Law.

God Bless

Udit Sharma

CS Ashish Jain

CS Ashish Jain (Querist)
Follow

07 December 2010 Sir there is confusion in your openion in the first sentance you told that the acts are valid but in the second sentance told it is not valid.

Upgrade to CAclubindia Pro. Subscribe Now!

Ankur Garg

Ankur Garg (Expert)
Follow

07 December 2010 Pic up a good law book and analyse section 290 yourself....as u r also a CS...:-)

Further presuming ur co. is an unlisted co. hold a BM 26.12.09 and re-appoint MD and file E-forms with late fee.

However in case of a listed company the only option left is voluntary compounding of offence u/s 621A.

Rgds