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Directors appointment

Gargi Ranade (CS) (619 Points)

13 April 2009

Hi Dear all,

I am working in private limited Co.and we are about to appoint one japanese director on the BOD while filing form 32, I am confused whether to appoint him as executive director or non-executive director ,I know the criteria if he is actively involved in day to day management then he must be appointed as executive director he is working in manufacturig dept. and not actively involved in any other matters of boards decision he is appointed as representative of parent company so as per my knowledge he can be appointed as NED , please share your veiws and guide me in this regard,

what will be the consequenses if I appoint him as Executive Director?

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3 Replies

HARDIK (COMPANY SECRETARY NCFM (Corporate Governance )) (664 Points)
Replied 13 April 2009

Since section 198 and 309 are not applicable to pvt companies. there is no bar on showing executive or non executive.

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Ankur Garg (Company Secretary and Compliance Officer) (114773 Points)
Replied 13 April 2009

Dear Gargi,

You have mentioned in your problem that if he is actively involved in day to day management then he must be appointed as executive director. Well I don’t agree with you on that point unless you appoint him as WTD.

Normally WTD and a director drawing salary are considered as executive director. If by writing “actively involved” here you mean he will be in the whole time employment then you have to consider him as a WTD and follow sec. 269 (CG or Schedule XIII).

In simple word if in Form-32 you are appointing him as Director/Additional Director then in that case simply mention Non Executive Director.

If you mention him as a WTD then you have to appoint him as Executive Director.

Views of other learned members are also solicited.

Ankur Garg (Company Secretary and Compliance Officer) (114773 Points)
Replied 14 April 2009

Hi Gargi,

Kindly appreciate—A director who should be appointed as NED as per law interpretation but appointed as ED in form-32 creates no default at all.

So just do not worry and please go ahead.

Further you are right as section-269 not applicable to a Pvt. Co. and as in your case also it is not applicable.

Note for your future reference----appointment of a director as NED or ED through form-32 does not make any difference as far as private company is concerned.

Only in case of a listed company appointment of a director as NED or ED through form-32 plays a very crucial role.

So you can appoint him as ED even if he belong to NED director category.