Ad-Free CAclubindia and Daily Updates on your mobile. Subscribe Now!

Is CEO is same as a MD of a company

Jayanti Dey (Practicing Company Secretary) (271 Points)

17 September 2011

In our Public Limited Company, We have on Director acting as a MD and another director acting as CEO of the company. Can two different directors act as MD and CEO in the company?Is it acceptable under the Companies Act, 1956? As there is no specific definition for CEO in the companies Act, 1956, I am little bit confused about it. Please let me know about it with supporting case laws.

Reply
Follow
Share

4 Replies

srinivass (CA Final) (2466 Points)
Replied 17 September 2011

Sir i have the same doubt if any one knows plz clarify with secton also

Upgrade to CAclubindia Pro. Subscribe Now!

CS Ankur Srivastava (Company Secretary & Compliance Officer) (17853 Points)
Replied 17 September 2011

Clause 49 of the Listing Agreement provides that the CEO is the Managing Director of the Company appointed in terms of the Companies Act, 1956 and CFO is the whole time Finance Director or any other person heading and discharging finance function.

Jayanti Dey (Practicing Company Secretary) (271 Points)
Replied 17 September 2011

Ankur Sir our company is an unlisted public company. Then what would you like to say whether two different directors can be appointed as a MD and CEO of the Company?Please throw some light on it by giving supporting case laws.

Ram Avtar Singh (Nagari Sultanpur U.P.Delhi) (14487 Points)
Replied 17 September 2011

CEO:- The executive who is responsible for a company operations, usually the President or the Chairman of the Board.

Generally, the Chairman of the Board of Directors is the Company’s legal representative and has the signatory power on behalf the Company. However, the Board of Directors may nominate one of its directors to undertake the role of a Chief Executive Officer (CEO) for the company and set forth his/her responsibilities, delegate to him/her the powers and authorities and determine his/her remunerations as they deem appropriate.

The functions of the CEO would normally be to supervise the overall management of the Company and to report the same to the Board. As such, the role of CEO is vital and can affect a company’s performance. The Board in turn conducts a regular review of the CEO’s per formance in order to ensure that the CEO is providing the best leadership for the company in the both long and short terms.