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Appointment of managing director in pvt. co.

Gargi Ranade (CS) (410 Points)

25 June 2016

Dear all, We are Pvt. Ltd. Co. 100% subsidiary of the Japanese Listed Company . We have appointed Managing Director as per instruction of our parent company. said appointment was made for 1 year and same will be getting over in August, 2016. Now , I understand that Managing Director in the Pvt. Co. can be appointed / re-appointed by Board Resolution . Now , my query is , 1. Do I need to regularize this re-appointment in the AGM. 2. whether disclosure in this regard in Directors report will be sufficient. Thanks & Regards,

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4 Replies

CS Arjun Rajagopal (B.com, ACS) (1056 Points)
Replied 25 June 2016

Answer to your query No.1 will be yes, it is required to regularise the reappointment of MD in AGM. But no return is required to be filed with ROC after the regularisation if re-appointment is already filed in form DIR-12 with ROC.

Answer to your query No.2 will be it is considered as a good practice to mention the appointment in directors report.

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Gargi Ranade (CS) (410 Points)
Replied 25 June 2016

Thanks a lot for your kind reply. However, I understand that in the exemption notification dated 5th June 2015 Pvt. Ltd. Companies are specifically exempted from the provisions of sub section 4 &5 of the section 196. Further in Section 203 it has been mentioned that KMP can be appointed through board resolution. In that case do I need to still regularize the appointment of MD through shareholders resolution. Please explain interpretation of the exemption notification with regard to this section. Regards,

CS Arjun Rajagopal (B.com, ACS) (1056 Points)
Replied 25 June 2016

My interpretation is that as per Section 152(2) of Companies Act, 2013 every director shall be appointed by the company in general meeting. The law is very clear, it has the given power to appoint every director on shareholders. Therefore, Whenever a MD is appointed by board of directors his appointed should be ratified in the immediately next general meeting.

Learned CCI members views are appreciated.

Gargi Ranade (CS) (410 Points)
Replied 25 June 2016

thanks for clarification once again, I will regularize the appointment in AGM . however, I have few more queries. section 152 (2) talks about appointment does appointment mentioned in this section means re-appointment also. Secondly , section 152(2) says that save as otherwise expressly provided in this act , here act also has similar provision in 196( 4) and same has been further exempted specifically for private company. Further, I am unable to understand that why section 203 does not require any shareholder approval for appointment / re-appointment of KMP. Does interpretation remain as earlier in this case also.