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Md for the life of the company

SENTHIL SELVENDRAN (chartered accountant) (200 Points)

11 February 2012

Dear collegues

In AOA, Can we put a clause like, " Mr.x be the managing director for the life time of the company", i dont think this one correct, kindly clarify with me.

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4 Replies

CS Rajveer Rai, Gurgaon (CS) (646 Points)
Replied 11 February 2012

as per section 317 of Companies Act term of MD can not exceed 5 years however it is not in case of WTD.Further as per section 9 provision of MOA and AOA can not override provision of Act hence a MD can not be appointed for whole life.

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surinder singh bhatia (CS) (123 Points)
Replied 13 February 2012

A Director of the company can be appointed as Md for company for the max period of 5 years , and futher his appointment can be renewed for futher period of 5years after the expiry of first 5years,but in no case the appointed period can exceed 5years in 1 go.and further in case of conflict between provisions of Act and AOA the provisions of Act prevails over the provisions of AOA or MOA.

Deepak Agrawal (Student) (61 Points)
Replied 14 February 2012

Section 317 which puts restriction of period of 5 years is not applicable to a private company and hence a private company can appoint MD for a longer period or even for life time. However, one small correction here. A person should be appointed as MD for his own life time instead of life time of the company for obvious reasons.

Thanks

Ajay Mishra (Company Secretary) (74337 Points)
Replied 15 February 2012

I agreed with Mr. Deepak, that the provision of appointment of MD is not applicable to private company and the private company is free to appoint for the life of the company without the insertion of clause of such appointment in Article of Association of the company.

I will suggest you to appoint MD for life time in private company without change in AOA, because if your company becomes subsidiary of public company then it require extra burden to change the AOA of company accordingly.

Regards

CS Ajay Mishra