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CEO appointment

milan Tyagi (Asst manager) (80 Points)

19 January 2011

Can Mr X be appointed as CEO of Pvt Ltd company in India (subsidiary company) under company law while he is already working in USA (Holding company) as an employee and receiving their salary there.please explain under which section of company law he is permitted to be appointed in india or else is there any other option available

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5 Replies

sameera (student) (61 Points)
Replied 19 January 2011

I dont think it is possible.

this is because that person is already in full time employee elsewhere outside india and receiving the relevant salary for that.

Now you want to appoint the same person in india as CEO. The term CEO is not defined currently u/CA1956. But i think it would be construed as Manager within the meaning of the current CA 1956. Since CEO requires the devotion of full time of the concerned person and since that person is already in full time employment elsewhere......i believe that it is not possible as such

But their may be applicability of sec.316 or 386 of the current CA1956, which provides the appointment of MD or Manager where that person is already acting as MD or Manager in one company, and which requires the approval of CG, and CG in turn should satisfy that the same person should act as MD or Manager for smooth functioning of both companies.

i request for second opinion on this from the learned members of this forum

regard

sameera

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Ganisht (CA Final) (196 Points)
Replied 19 January 2011

Mr X will get appointment in Indian private company.

But CEO is covered under the 'Place of Profit' as per section 314 & this section is applicable only in the case of director. Since Mr. X is not a director he is just a employee therefore this section is not applicable.

Moreover Sec 316 & 386 applied in the case of public company. since Mr.x is appointed as a employee( CEO is also a employee of the company) not as a director in private company, Therefore these section are also not applicable.

Appointment of Mr. X as CEO is valid

milan Tyagi (Asst manager) (80 Points)
Replied 19 January 2011

Hi Ganisht

I think you are right

Thanks for your reply

shruthy (student) (39 Points)
Replied 19 January 2011

as per your answer i understood that directors would not be construed as employees of the company. is it right?

if that is so is there any scenario whereunder even directors also becomes employees of the company?

please give your valuable suggestions

thank you

shruthy

Jayashree S Iyer (Company Secretary) (3224 Points)
Replied 21 January 2011

Whole Time Directors devote their full time to the company and hence they can be equated to the employees of the Company. However, in true sense, Directors are not employees of the Company. Employees are appointed by the Management and they report to the Management while Directors are appointed by the Shareholders and they report to the shareholders. Directors are the agents of shareholders and occupy a fiduciary position.