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Query regarding cfo

Sweta Srivastava (CS FINAL STUDENT) (127 Points)

25 September 2012

Pls Let me know that Is their any provision or req that If a Co. has MD its not req compulsorily to have a CFO n related prov for CFO appointment.

Thanks.

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5 Replies

Smriti Dhawan (Company Secretary ) (347 Points)
Replied 25 September 2012

There is no provision for appointment of CFO under Companies Act, 1956 except in Clause 49 of Listing Agreement.

There is no requirement under Companies Act, that a Company which has MD is not Required to have CFO , as defined in Clause 49(V) that the CEO means the Managing Director or the Manager appointed under Companies Act,1956 and CFO means the Whole time finance Director or any other person heading the finance function.

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(Guest)

Yes, there is no provision under the Companies Act 1956 regarding mandatory appointment of a CFO. Even the Listing Agreement does not clearly mandate regarding appointing a CFO. Only from few clauses we can infer that a person called as ‘CFO’ is required to comply few clauses of the Listing agreement.

As per clause 49(II)(D)(12A), a CFO means, “the whole-time Finance Director or any other person heading the finance function or discharging that function”.

Further, as per clause 49(V), CEO (MD) & CFO both are required to make a certification to the Board regarding maintenance of internal controls.

As per the Agreement, a covering letter of the annual audit report has to be filed with the Stock Exchange. It has to be signed by a CEO, CFO, auditor of the company and the Chairman of the Audit Committee.

Thus, appointment of a ‘CFO’ along with an MD is necessary for complying with the clauses of the listing Agreement.

Regards,

Veeral Gandhi

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binny (ca) (23 Points)
Replied 25 September 2012

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CS Ankur Srivastava (Company Secretary & Compliance Officer) (17853 Points)
Replied 25 September 2012

Agree with the learned members.... Appointment of CFO is required under listing agreement but ther is no such requirement under companies act.

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CS RAJESH C.CHOUDHARY (ASSISTANT MANAGER) (14607 Points)
Replied 11 October 2012

So far there is no provision for appointment of CFO under company law.
In the amendment bill there is a mention about CFO reg. certification along with CEO.

In case of term loans, there will be a condition that the company appoints a CFO etc.

In case of listing also there will be similar provisions.

Regards,

RAJESH CHOUDHARY