CA.SKR (CA; CS-Final (One Group); DISA (ICAI); Insolvency Professional) (442 Points)
22 February 2010A private limited company wishes to appoint one of it's employee as a whole time director, who will continue to get salary from the company as decided by the management. What is the procedure to be followed by the company for such an appointment? Is approval of members required for this appointment and remuneration or just Board's approval is sufficient? Please let me know.
Thanks in advance.
Ankur Garg
(Company Secretary and Compliance Officer)
(114773 Points)
Replied 22 February 2010
Being a private company section 269 and schedule XIII is not applicable. In a private co. only board resolution is enough to appoint WTD. No need to take shareholders’ approval.
Regards
CourseCart.in
(Mentor at SHAYVIDZ Academy)
(3756 Points)
Replied 22 February 2010
the company is private limited company, so just pass the board resolution & file form32 to MCA..
CA.SKR
(CA; CS-Final (One Group); DISA (ICAI); Insolvency Professional)
(442 Points)
Replied 22 February 2010
Thanks Ankur and Adarsh for your reply. Is any agreement to be entered into between the company and the proposed whole-time director stating the remuneration, period and other terms & conditions of such appointment? If yes, please provide specimen of such draft agreement and Board resolution.
Further, will that newly appointed WT Director in the Board meeting be treated as an Additional Director, whose office will expire at the next AGM or he will be treated as a regular director?
Thanks once again.
CourseCart.in
(Mentor at SHAYVIDZ Academy)
(3756 Points)
Replied 24 February 2010
I think there must be an agreement.. but m not hving specimen of the same...
If BOD appoints the director, then it must be treated as Additional Director u/s 260..
Sec 258 gives the power to GM for appointment of Director.. but Sec 260 overrides sec 252, 258, 259...
so director is appointed in BODM, then the same shud be treated as Additional Director n his office will be upto next AGM..
but if the director is appointed in GM by OR for fixed term, then he can continue for such period as per the terms..
Also consider the view of other members.....
CS Ankur Srivastava
(Company Secretary & Compliance Officer)
(17853 Points)
Replied 24 February 2010
In case of Private Company only Board Resolution and form 32 is sufficient. Further, he will be an Additional Director who shall hold the office only upto the date of the next Annual General Meeting of the Company wherein he may be regularise.
Neeta
(Finance)
(345 Points)
Replied 24 February 2010
No, the newly appointed WTD will not be treated as Additional director as regards pvt co. Appointment as Additional director and retirement procedure at the AGM and all applies to public company not private.
As regards a Private ,,simply pass Board resolution for the appointment of WTD and file form 32 with ROC.
CourseCart.in
(Mentor at SHAYVIDZ Academy)
(3756 Points)
Replied 24 February 2010
Neeta,
In case of pvt company, under which section the BOARD will appoint WTD?
only in case of additional directors, alternate director & casual vacancy, the Borad has been given power to appoint directors...
If WTD is appointed by BOARD, then it must be treated as additional director... because board cannot appoint director for a fixed term over n above the term defined in above 3 cases...
Ankur Garg
(Company Secretary and Compliance Officer)
(114773 Points)
Replied 24 February 2010
First you have to appoint him as additional director as per section-260. Then pass the next resolution to appoint him as WTD.
Further if you fail to regularise him as regular director then he will automatically cease to be a WTD.
So the agenda of your BM would be:
1. Appointment of Mr. X as Additional director.
2. Appointment of Mr. X as WTD.
Regards
Neeta
(Finance)
(345 Points)
Replied 24 February 2010
ok adarsh agreed , it was WTD.. thax ankur sir !
Ankur Garg
(Company Secretary and Compliance Officer)
(114773 Points)
Replied 24 February 2010
Dear Neeta,
Kindly appreciate person should be director first before the appointment as MD or WTD. That's why first we have to appoint him as director and then only we can appoint him as MD or WTD.
Regards
Ankur Garg
(Company Secretary and Compliance Officer)
(114773 Points)
Replied 24 February 2010
| Originally posted by : CA.Satendar Kumar | ||
 |
Thanks Ankur and Adarsh for your reply. Is any agreement to be entered into between the company and the proposed whole-time director stating the remuneration, period and other terms & conditions of such appointment? If yes, please provide specimen of such draft agreement and Board resolution. Further, will that newly appointed WT Director in the Board meeting be treated as an Additional Director, whose office will expire at the next AGM or he will be treated as a regular director? Thanks once again. |
 |
Yes. It is advisable to enter in to an agreement with WTD.
Please find enclosed herewith a draft agreement with MD. Modify it according to your requirement.
Best Regards
CA.SKR
(CA; CS-Final (One Group); DISA (ICAI); Insolvency Professional)
(442 Points)
Replied 24 February 2010
The sequence of events as I understood from the above expert opinions will be:-
1) To appoint employee as an Additional Director in the BM,
2) Thereafter, in the same BM, appoint that Additional Director as WTD,
3) To file one Form 32 for both the above appointments / change of designation showing 2 entries in Form 32 i.e. 1st entry for appointment as AD and 2nd entry for change of designation as WTD,
4) To regularise appointment of AD / WTD in the ensuing AGM as a regular director,
5) To file fresh Form 32 for the same person for appointment as a regular director.
If I have missed out any event, please correct me.
Now, my additional query is regarding tenure & remuneration of WTD, appointed in the first BM. Is he to be appointed only till the date of ensuing AGM or he can be appointed for a longer period also say 3 years. Further, what will be the period of the agreement i.e. till AGM or 3 years.
Please clarify on the above points also.
Thanks
CS Ankur Srivastava
(Company Secretary & Compliance Officer)
(17853 Points)
Replied 26 February 2010
| Originally posted by : Ankur Garg | ||
|
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Dear Neeta, Kindly appreciate person should be director first before the appointment as MD or WTD. That's why first we have to appoint him as director and then only we can appoint him as MD or WTD. Regards |
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Dear Ankur Ji,
I have a confusion regarding your above reply. In my opinion, for the appointment of WTD it is not necessary that the person must be director. In general meeting WTD can be appointed directly even in case of Board Meeting when we appoint any one as Additonal Director he can also be WTD.
Please explain......
CA.SKR
(CA; CS-Final (One Group); DISA (ICAI); Insolvency Professional)
(442 Points)
Replied 01 April 2010
Dear Mr. Ankur,
In your earlier reply, you have stated as under: -
"First you have to appoint him as additional director as per section-260. Then pass the next resolution to appoint him as WTD.
Further if you fail to regularise him as regular director then he will automatically cease to be a WTD.
So the agenda of your BM would be:
1. Appointment of Mr. X as Additional director.
2. Appointment of Mr. X as WTD."
My further query is as under: -
Appointment of Additional Director in BM is OK.
But as far as appointment of WTD in BM is concerned, I have gone through the AOA of the Pvt. Ltd. Company and there is no such provision in AOA. The relevant articles relating to directors appointment and remuneration, in brief, are reproduced as under:-
24. "The Directors may from time to time, appoint one or more of their body to the office of the Managing Director................."
25. "The Directors shall have the power to appoint any person as Additional Director............"
26. " The MD may be paid such remuneration as may be determined by the Board....................."
32. "Subject to the provisions of the Co. Act, 1956 the director shall receive such remuneration for their services as may be determined by the Company in GM or as may be contained in an agreement, if any, between the company and any Director or Directors"
None of the above mentioned Articles say anything about appointment of WTD in the Board Meeting. In this situation, in my opinion, the appointment of WTD is to be made by Co. in GM and not by the Board. Else AOA is to be amended accordingly.
Please clarify.
Thanks
CAclubindia
