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Appointment of md

Law Aspire (CS) (755 Points)

24 March 2015

Please provide check list for appointment of MD as per the provisions of Companies Act, 2013?

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Arpit Shah (Accountant) (21438 Points)
Replied 24 March 2015

Check File

Attached File : 897463 1414834 the companies appointment and qualification of directors rules 2014 .pdf downloaded: 376 times

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JD ( Business) (352 Points)
Replied 24 March 2015

DSC - Digital Signature ( needed for filing DIR - 3)

DIR - 3 form ( includes DIR - 4 , verification)

I assume DIR - 3 is compactible with all kinds of Director inclusion Keep a tab on the below documents while filing DIR - 3

Photograph Identity & Address Proof documents

1) Voters ID card 2) PAN card ( mandatory for Indian applicants forms to filled as per details mentioned on PAN card, Not mandatory for NRI, But it’s better to apply) Verify PAN card on the website. Passport ( mandatory for foreign nationals/NRI) Details of a valid passport should be filled in form DIR-3 and a certified copy of same should be attached with DIN application. All supporting documents including photograph should be certified by the Indian Embassy or a notary in the home country of the applicant or by the Managing Director / CEO / Company Secretary of the company registered in India, in which applicant is a director. If a foreign director has a valid multiple-entry Indian visa or Person of Indian Origin card or Overseas Citizen of India card, then the attestation could also be done by Public Notary / Gazetted Officer in India or practicing CA / CS / CWA.
Once on receipt of DIN

The applicant needs to submit DIR - 2 & Interest in other entities

On receipt of the above , In the - AGM appoint the managing Director.

Board resolution

DIR - 12 ( to be filled by your chartered accountant, specify Managing Director)

MGT - 14 needs to be filed with the BR

MR - 1 needs to be passed withing 60 days of Board resolution.

there maybe errors in the above process, kindly cross check the same or ask for expert advice.

Arpit Shah (Accountant) (21438 Points)
Replied 24 March 2015

Check Appointment & Qualification As Per Company Act 2013

Attached File : 897463 1414842 10 appointment and qualifications of directors.pdf downloaded: 244 times

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Arpit Shah (Accountant) (21438 Points)
Replied 24 March 2015

Procedure & Requirement Of Appointment Of Managing Director (MD) For Private Limited Company

Appointment of Managing Director, Whole- Time Director OR Manager (Section: 196):

This Section is applicable on Both Private as well as Public companies. Only this section of Chapter-XIII applicable on Private Companies. At the time of practical working on this section, some points create difficulties, because for appointment of Managerial Personnel company have to comply with provisions of Section- 196 and have to leave all other sections of this chapter.

MY OPINION: As per Law, there is no compulsion for private company to appoint MD, WTD and Manager. As per Act Private Company can be in continue working without MD, WTD and manager throughout the life of company.

But problems arise when Private company appoint any Managerial Personnel willingly. Then company requires following Section: 196 of CA-2013.

SECTION- 196:

A company can appoint either Managing Director or Manager not both {Sub – section (1)}.

MD, WTD and Manager can be appoint for maximum tenure of 5 years. But company may reappoint them for next term of 5 Years or lesser period, before expiry of existing term.

But re-appointment cannot be done earlier than one year before expiry of the term. This means, company may re-appoint them for next term in last one year of current term.

The minimum age for appointment for these positions is twenty – one years and normal retirement age is seventy years. (So the person who does not attain age of 21 year can’t appoint as Managerial Personnel).

But a person who has attained age of 70 year can be appoint as Managerial Personnel, by passing of Special Resolution in General Meeting, Condition: Explanatory Statement justifying such appointment shall be annexed to the notice of General Meeting for motion of appointment.

For appointment of a person who has attained age of 70 year following procedure:
- Call a Board Meeting
- Issue notice of General Meeting
- Pass Special Resolution In General Meeting.
- File MGT-14 with ROC within 30 days of passing of Resolution.
- File form DIR-12 and MR-1 with ROC with in 30 days of passing of resolution of appointment.

To appoint a person as Managerial personnel:
- Appointee should not be an un-discharged insolvent nor has any time been adjudged as an insolvent.
- Appointee has not any time suspended payment to his creditors or has made a composition with them.
- Appointee should not be a convict of an offence and sentenced for a period of more than six months. {Sub – section (3)

APPOINTMENT OF MANAGERIAL PERSONNEL:-

For appointment of Managerial Personnel in private company we have to do following things:

Require to pass Board Resolution.
Require approval of Share Holders in General Meeting.
Follow the provisions of Schedule – V of Companies Act, 2013. (If there is any variance to the conditions specified in the schedule, this appointment shall also be subject to the approval of the Central Government. {Sub – section (3)})

PROCEDURE FOR APPOINTMENT OF MANAGERIAL PERSONNEL IF COMPANY HAS ADEQUATE PROFIT:

a. Issue Notice for Calling Board Meeting. Notice shall include:

Terms and conditions of such appointment.
Remuneration payable to such Managerial Personnel.
Interest of Directors in such appointment.

b. Documents Require from Appointee:

Declaration that he is not disqualified to appoint as director. (Secion-152(4).
Consent that he is willing to appoint as director.(Section-152(5).
Consent that he is willing to appoint as Managing Director.

c. Pass Resolution in Meeting for appointment of Managerial Personnel.

d. File Form MGT-14 within 30 days of passing of resolution. (Secion-179)

e. File Form DIR-12 within 30 days of passing of resolution.

f. File Form MR-1 within 60 days of passing of resolution. (Section-196).

g. GM; which will help after this appointment, Take Approval of Shareholders by passing of resolution.

DRAFT FORMATS ATTACHED BELOW:

Notice Calling Board Meeting.
Agenda of Board Meeting.
Attendance Sheet of Board Meeting.
Leave of Absence, if require.
Declaration under section 152(4)
Consent under section 152(5)
Consent to act as Managerial Personnel.
Draft MD Agreement, if require.
Draft Board Meeting Resolution.
Will explain in my next article Process of filling, filing and attachments of form MR-1.

FAQ’S:

Is it mandatory to file the return of appointment of Managerial Personnel appointed in terms of Section 196?

Ans. Yes – it is mandatory for a company to file a return of appointment of a managing director, whole time director or manager, chief executive officer, company secretary and Chief Financial officer in Form no. MR.1 as prescribed in Rule 3 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014. Further, particulars of appointment of Managerial Personnel and any change among them are also required to be filed in Form DIR-12.

Can a company have two Managing Directors?

Ans: As per third proviso to section 203 of the COMPANIES ACT, 2013 a company may appoint or employ a person as its MD, if he is the MD or Manager of one and not more than one other company with the consent of all directors present at meeting.

Will Provisions of Section- 197 applicable on Private Companies?

Ans. No, the provision of Seciton-197 will not applicable on private companies. For appointment of managerial personnel private company require to follow section-196, but there is no need to follow section-197 for remuneration to managerial personnel.

4. Will Managerial personnel appointed under section 196, treated as KMP?

Ans. No, Managerial Personnel will not be treated as KMP.

Section: 203 talks about KMP and this section not applicable on Private Companies. So if a private company appoints any managerial personnel there Is no need to follow provisions of section-203.

5. If any existing director is interested director in pursuance to appointment of Managerial Personnel, so can he participate in this resolution?

Ans: No, Existing Director can’t participate in this resolution, As per Section-184 of Companies Act, 2013. Such interested director have to disclose before the meeting his interest.

CONCLUSION: As per Companies Act-2013 there is no compulsion to appoint MD/WTD/MANAGER. But some companies Appoint MD/WTD/MANAGER. So Private companies can appoint MD/WTD/ Manager as per process given above. In Companies Act-2013 process is lengthy but it’s not as difficult. It’s just require assistance of Professionals like Company Secretary or Charted Accountant. Because there is heavy penalty under Companies Act-2013. So its my request from all professionals and businessman be careful while working under companies Act-2013.

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