Deepali Garg (none) (148 Points)
09 July 2012Hi
Suppose if a person is appointed as a Managing director in a Private Ltd. company for a ter of 7 years. immediately after his appointment the company is converted into public company. What will be the term of the office of Manging Director 5 years or 7 years?
Dhiren Kumar Rout
(Lead Manager - Internal Audit)
(161 Points)
Replied 09 July 2012
Section 317 of Companies Act, 1956
MANAGING DIRECTOR NOT TO BE APPOINTED FOR MORE THAN FIVE YEARS AT A TIME.
(1) No company shall, after the commencement of this Act, appoint or employ any individual as its
managing director for a term exceeding five years at a time.
(2) Any individual holding at the commencement of this Act the office of managing director in a
company shall, unless his term expires earlier, be deemed to have vacated his office immediately
on the expiry of five years from the commencement of this Act.
(3) Nothing contained in sub-section (1) shall be deemed to prohibit the re-appointment, reemployment,
or the extension of the term of office, of any person by further periods not exceeding
five years on each occasion :
Provided that any such re-appointment, re-employment or extension shall not be sanctioned
earlier than two years from the date on which it is to come into force.
(4) This section shall not apply to a private company unless it is a subsidiary of a public company
Dhiren Kumar Rout
(Lead Manager - Internal Audit)
(161 Points)
Replied 09 July 2012
As the company converted to public company immediately after approntment of MD in the instant case, then Section 317 is applicable.
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