Companies Act, 2013 · Chapter XIII: Appointment And Remuneration Of Managerial Personnel · In force
This section is for requiring certain companies to appoint key managerial personnel, including a managing director, company secretary, and Chief Financial Officer, and outlining the rules for their appointment and tenure.
What the section says
In plain terms
(1)Every company belonging to such class or classes of companies as may be prescribed shall have the following whole-time key managerial personnel,—
Every company in a prescribed class must have a managing director, Chief Executive Officer, or manager, as well as a company secretary and Chief Financial Officer, with some exceptions for companies with specific articles or those that do not carry multiple businesses.
(1)(i)managing director, or Chief Executive Officer or manager and in their absence, a whole-time director;
(1)(ii)company secretary; and (iii) Chief Financial Officer: Provided that an individual shall not be appointed or reappointed as the chairperson of the company, in pursuance of the articles of the company, as well as the managing director or Chief Executive Officer of the company at the same time after the date of commencement of this Act unless,—
(1)(a)the articles of such a company provide otherwise; or (b) the company does not carry multiple businesses: Provided further that nothing contained in the first proviso shall apply to such class of companies engaged in multiple businesses and which has appointed one or more Chief Executive Officers for each such business as may be notified by the Central Government.
(2)Every whole-time key managerial personnel of a company shall be appointed by means of a resolution of the Board containing the terms and conditions of the appointment including the remuneration.
The Board must appoint whole-time key managerial personnel through a resolution that includes the terms and conditions of the appointment, including remuneration.
(3)A whole-time key managerial personnel shall not hold office in more than one company except in its subsidiary company at the same time:
A whole-time key managerial personnel can only hold office in one company, except in a subsidiary company, and must choose one company to continue in if holding multiple offices at the commencement of this Act, within six months.
provisoProvided that nothing contained in this sub-section shall disentitle a key managerial personnel from being a director of any company with the permission of the Board:
provisoProvided further that whole-time key managerial personnel holding office in more than one company at the same time on the date of commencement of this Act, shall, within a period of six months from such commencement, choose one company, in which he wishes to continue to hold the office of key managerial personnel:
provisoProvided also that a company may appoint or employ a person as its managing director, if he is the managing director or manager of one, and of not more than one, other company and such appointment or employment is made or approved by a resolution passed at a meeting of the Board with the consent of all the directors present at the meeting and of which meeting, and of the resolution to be moved thereat, specific notice has been given to all the directors then in India.
(4)If the office of any whole-time key managerial personnel is vacated, the resulting vacancy shall be filled-up by the Board at a meeting of the Board within a period of six months from the date of such vacancy.
The Board must fill any vacancy in whole-time key managerial personnel within six months of the vacancy occurring.
(5)If any company makes any default in complying with the provisions of this section, such company shall be liable to a penalty of five lakh rupees and every director and key managerial personnel of the company who is in default shall be liable to a penalty of fifty thousand rupees and where the default is a continuing one, with a further penalty of one thousand rupees for each day after the first during which such default continues but not exceeding five lakh rupees.]
The right-hand column is written from the section text, not quoted from it, and it has no legal force. Where the two differ, the left-hand column is the law.
Reproduced from the official India Code print for reference. Check the current text on India Code before you rely on it, and read the section alongside its Rules. Nothing here is legal advice.