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Corporate law

Souvik Kumar Ghosh (CA Final) (1368 Points)

27 October 2012

Can a person become Whole Time Director or Managing Director in more than one Pvt Ltd Company? Please provide the relevant section.

Regards

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9 Replies

Charu Srivastava (Company Secretary) (4210 Points)
Replied 27 October 2012

In case of Managing Director, person can be MD in two companies pursuant to section 316, provided the conditions of same section is satisfied.

A person cannot be a WTD in more than one Company.

Thanks & Regards

Charu

2 Like

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Souvik Kumar Ghosh (CA Final) (1368 Points)
Replied 27 October 2012

The fact that a person can not be a whole time director in more than one Company companies unless conditions u/s-316 are satiesfied- is it applicable to Pvt Ltd Company?Please provide the relevant section on the basis of which u are drawing the conclusion.

Regards

Venkateswara Rao Sapare (Accountant) (1500 Points)
Replied 27 October 2012

Originally posted by : Charu Srivastava
	In case of Managing Director, person can be MD in two companies pursuant to section 316, provided the conditions of same section is satisfied. A person cannot be a WTD in more than one Company. Thanks & Regards Charu

Ms.Srivatsava is correct.

1 Like

Sumit Jaiswal (Company Secretary) (818 Points)
Replied 27 October 2012

Section 316(1) states: 'No public company and no private company which is a subsidiary of a public company] shall, after the commencement of this Act, appoint or employ any person as managing director, if he is either the managing director or the manager of [any other company (including a private company which is not a subsidiary of a public company)], except as provided in sub- section (2).'

Therfore, section 316 does not apply to a private company. A person may be appointed as managing director of more than one private company and no approval of the Central Govt. will be required in this regard. However the private company's article must be checked whether it prescribes any such restriction.

I am not sure whether a person can be a whole-time director in more than one private company and would like to know in this regard. I think the Companies Act do not clearly indicate the position of whole-time director.

Charu Srivastava (Company Secretary) (4210 Points)
Replied 27 October 2012

Mark the essence of the statment

(including a private company which is not a subsidiary of a public company)) means private company weather it is subsidary of public company or not so private company is covered in this section

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Sumit Jaiswal (Company Secretary) (818 Points)
Replied 27 October 2012

Charuji, it implies that a public company or private company which is subsidiary of a public company will not employ a person as managing director if he is already a managing director in any other company. It means that a private limited company which is not a subsidiary of a public company can appoint a person as managing director even if he/she is MD in any other company. The restriction is not to a private company.

Charu Srivastava (Company Secretary) (4210 Points)
Replied 29 October 2012

There it is specifically written that including the private who are not the subsidiary of Publice, it implies all private Company is included.

Sumit Jaiswal (Company Secretary) (818 Points)
Replied 29 October 2012

Originally posted by : Sumit Jaiswal
	Section 316(1) states: 'No public company and no private company which is a subsidiary of a public company] shall, after the commencement of this Act, appoint or employ any person as managing director, if he is either the managing director or the manager of [any other company (including a private company which is not a subsidiary of a public company)], except as provided in sub- section (2).'

Please note the highlighted words. A public company and a private company which is a subsidiary of a public company shall not appoint a person as MD if he is a MD in any other company including a private company which is not a subsidiary of a public company.

Therefore, a private company which is not a subsidiary of public company can appoint a person as MD even if he is already a MD in any other private company. This is what was asked by this question. I reiterate that the restriction specified in Sec 316(1) is not in respect of a private company. Hope it is clear now.

Pawan Chauhan (Article assistant) (26 Points)
Replied 07 November 2012

Yes,

I completely agree with Mr. Sumit Jaiswal.

Section 316 does not applicable on a Private Limited Company. Moreover a Private Limited Company can appoint a managing director even if he is a MD of any Public Limited or a Private Limited which is a subsidiary of a Public Limited Company. And this will not effect the continuation of office of the person as MD of a public limited company.

In reply of other query, a person can not be appointed a Whole Time Director (WTD) in more that one company. As WTD means a person who is putting his whole time execlusively in the company. Therefore A person can be a WTD in one company only either it is a public or private company.

CA. Pawan Chauhan

ca.pawanchauhan @ gmail.com