Can an employee can be designated as Director viz. Production Director/Sales Director etc. even if he is not the memebers of Board of Directors.
Whether the word Director cannot be used by one other than who appointed as Director in BM. Please let me know the relevant section/notification/circulars/guidelines or case laws. It's appreciable if quote the relevant text.
Instances have come to the notice of the Department where companies have designated executives who are not members of the Board as special director, director administration etc. Such designations give an impression to public at large and those dealing with these companies and the executives that they are full-fledged directors entitled to act as such on behalf of the company. In fact these executives are not directors on the board of the companies, it will be patently wrong on the part of the companies to designate them as directors. The Department is, therefore, constrained to advise companies to desist from giving such designations to their executives which tend to mislead.
when I go through the said circular it appears to me that it's only an advise not mandatory. Can anyone of you explain the interpretation of the word 'constrained to advise'used in circular.
Off course...u r right.. this is not mandatory. That is the reason y so many companies are using such designations.
According to me the phrase " constrained to advise" means the department has reviewed the matter in depth before issuing the circular and it also sounds the possibility of madatory provision in this regard in the years to come.
It wl take some more time. Its INDIA!!!!
Anyway for the time being v r safe to use such designation. But as a professionals we should not advise the same.
CAclubindia
