Section 196 of ca 2013

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Querist : Anonymous

Querist : Anonymous (Querist)

12 July 2014 According to Section 196 of Companies Act, 2013 Managing Director of all companies can be appointed only for a term of five years. Earlier this [provision was not applicable to private companies. in that case the period of managing director for five years will counted from 1 April 2014 ( Applicability of THIS SECTION) or before that ?

In case of our company MD was appointed in year 1984 and his term was not fixed as it was as per discretion of BOD. Now as section 196 of CA 2013 has now become applicable for private companies we can appoint MD only for five years. Shall we have to pass a Board resolution stating his term for five years starting from 1 April 2014 or will it be counted earlier from 1st April 2013. Please guide.

Ankur Garg

Ankur Garg (Expert)
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12 July 2014 There is no doubt about the fact that you have to pass a board resolution u/s 196 to fix the term of your MD. You can do the same in first board meeting held after April 01, 2014.

This resolution is specifically for fixation of term of the MD and not for changing other terms and conditions of appointment. You can simply start the new term from April 01, 2014 to next 5 years.

Revert if there is any doubt.

Thanks

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Querist : Anonymous

Querist : Anonymous (Querist)

12 July 2014 Thanks alot sir. My doubt has been cleared .
thanks.

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Ankur Garg

Ankur Garg (Expert)
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12 July 2014 You are always welcome and keep sharing your doubts with us through this platform as this is the only way out for unlocking the provisions of new Companies act, 2013.

Thanks

Querist : Anonymous

Querist : Anonymous (Querist)

25 July 2014 Hello Sir,
1. One more thing Section 196(4) states that terms and conditions of Appointment of MD and remuneration payable shall be approved by Board of Directors firstly and then shall be approved by members in their meeting.
So, in case where we are only fixing term of MD for five years for compliance of section 196 (2) of CA 2013, only Board approval is sufficient or that Members approval is also required.
And here in this section word appointment includes reappointment also?

Kindly advice
Thanks