Dear professional Colleagues,
Re-appointment of Managing Director in a Public company is a common topic for professionals as they need to handle it frequently.
Let’s discuss the provisions of Re-appointment of Managing Director in an unlisted Public company along with statutory timelines and ROC reporting formalities.
PROVISION
Re-appointment of Managing Director in a public company can be done by board meeting resolution subject to the approval of shareholders in a General Meeting.
For example if the term of Managing Director expires on 31.03.2013, then there is no need to worry at all. All we need to do is to simply pass a board resolution for re-appointment before 31.03.2013 subject to the approval of members in the general meeting and confirm the MD appointment in next General Meeting held immediately after his/her appointment by the board.
In respect of the re-appointment of MD above, file all the necessary ROC forms (form 23 and form 25C) from the date of board resolution. Nothing is to be filed with ROC after confirmation of the MD appointment by the shareholders in the General Meeting as far as re-appointment of Managing Director is concerned.
As per DCA clarification the above practice is very much possible. Find below the extract of DCA clarification:
As per circular number 2/94 dated 10 February 1994— Managing Director may initially be appointed by a board resolution subject to the approval of members in the general meeting and such approval may be obtained in the first general meeting of the company held immediately after his appointment by the board.
Note: Remember one thing retrospective re-appointment of Managing Director is not possible due to section 317 hence passing of Board Resolution subject to the approval of members before 31.03.2013 is mandatory.
Retrospective re-appointment of MD not possible u/s 317
Appreciate further Section 317 has provide us ample time to initiate and conclude the formalities for re-appointment of MD, before the actual expiry of MD’s present tenure and that is why retrospective re-appointment of Managing Director is not possible under section 317.
E-FORM FILING WITH ROC:
1. Form-25C/25A, as the case may be, under section 269 within 90 days from the date of passing of board resolution.
2. Form-23 under section 192(4)(c) within 30 days of passing board resolution.
Note: Form-32 is not required in case of re-appointment of Managing Director as there is no change composition in board of directors involved.
I hope this brief write up would be of some help in your professional working.
Best Regards
Ankur
CAclubindia
