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Appointment of M.D.in case of private company

Himani (NA) (54 Points)

02 January 2009

While appointing a Director as Managing Director in case of private company, which section would be quoted while drafting the resolution? Please guide as to what section will be quoted in Form-23?

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Anu Agarwal (Manager-Audits) (173 Points)
Replied 02 January 2009

read sec 267,268,269 of the Companies act

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(Guest)

ya , anu you are right

Muralidharan (Self Employed) (1034 Points)
Replied 02 January 2009

A private limited company if so authorised by its Articles of Association can appoint a Managing Director for such period(s) and also pay such remuneration. The powers are vested with the Board. No shareholder approval is required. The company after the board meeting should file Form 32 and Form 23 along with copy of board resolutions with ROC within 30 days. Form 23 is required to be filed because Section 192 is attracted in respect of appointment of MD.

There is no specific Section under the provisions of the Companies Act, 1956 that deals with appointment of Managing Director of Private Limited Companies. Section 198, 269, 309 and Schedule XIII are all applicable only to a Public Limited Company.

Muralidharan

Himani (NA) (54 Points)
Replied 05 January 2009

Thanks a lot Muralidharan jee. You have cleared my doubts... Pl guide me further...Is it necessary to appoint MD for a particular period? Can a resolution be drafted simply without mentioning tenure so as to avoid filing Form 32 after the said tenure expires...

If possible , would u plz draft one such resolution for me...

Thanks and Regards

Himani

Muralidharan (Self Employed) (1034 Points)
Replied 06 January 2009

Originally posted by :Himani
"	Thanks a lot Muralidharan jee. You have cleared my doubts... Pl guide me further...Is it necessary to appoint MD for a particular period? Can a resolution be drafted simply without mentioning tenure so as to avoid filing Form 32 after the said tenure expires... If possible , would u plz draft one such resolution for me... Thanks and Regards Himani	"

A private limited company can appoint Managing Director without a fixed period of tenure. The MD can be appointed to the office even until he resigns such office. In other words there is no restrictive provision in the Act in respect of period of appointment of MD in the case of private limited companies. Whereas a public limited company cannot appoint a MD for a period more than five years.