MANAGEMENT AND CONTROL OF COMPANIES – III – MANAGING DIRECTOR, WHOLE-TIME DIRECTOR AND MANAGER

MANAGEMENT AND CONTROL OF COMPANIES – III – MANAGING DIRECTOR, WHOLE-TIME DIRECTOR AND MANAGER

1. MANAGING DIRECTOR

"Managing director" means a director who, by virtue of an agreement with the company or of a resolution passed by the company in general meeting or by its Board of directors or, by virtue of its memorandum or articles of association, is entrusted with any powers of management which would not otherwise be exercisable by him, and includes a director occupying the position of a managing director, by whatever name called – Section 02(26)

If a company wants to appoint a person as Managing Director, who is not a director of company, he has first to appointed as an additional director in accordance with Section 260

Section 317 restricts the period for which Managing Director be appointed at a time upto five years.

Obtain qualification shares prescribed by Articles within a period of two months from date of appointment – Section 270

Managing Director may be appointed:-

• By virtue of an agreement with the Company
• By virtue of resolution passed by company
• By virtue of resolution passed by Board of Directors
• By virtue of MOA and AOA.

No appointment without approval of Central Government – Section 269(2)

Relationship with the Board of Directors

He is a link between the directors and executives of company.  Coordinator of activities of the various divisions and department of Company.

Liability 

Liable for any breach, whether willful or unintentional, of any duties and powers entrusted to him under the terms and conditions of his appointment.

2. WHOLE- TIME DIRECTOR/ EXECUTIVE DIRECTOR –

Whole time Director is virtually Managing Director

The terms whole- time director and executive directors are not specifically defined in Companies Act except saying that he is in whole time employment.

Appointment is subject to Section 274

No restriction of Section 317

Remuneration – Section 387

Either by way of a monthly payment or by way of a specified percentage of the "net profits" of the company calculated in the manner laid down in sections 350 and 351 [3] or partly by the one way and partly by the other

Except with the approval of the Central Government such remuneration shall not exceed in the aggregate five per cent of the net profits.

Sitting Fees - Section 310 r.w.r 10B of Companies (Central Government's) General Rules and Forms, 1956—

For the purposes of the first proviso to section 310, the amount of remuneration by way of fee for each meeting of the Board of directors or a committee thereof, shall be as under:—

Companies with a paid-up share capital and free reserves of Rs. 10 crore and above or turnover of Rs. 50 crore and above the Sitting fees not to exceed the sum of twenty thousand rupees. Whereas for Other companies Sitting fees not to exceed the sum of ten thousand rupees

3. MANAGER

"Manager" means an individual (not being the managing agent) who, subject to the superintendence, control and direction of the Board of Directors, has the management of the whole, or substantially the whole, of the affairs of a company, and includes a director or any other person occupying the position of a manager, by whatever name called, and whether under a contract of service or not - Section 02(24)

Section 197A - No company shall appoint or employ at the same time a managing director and manager.

No company shall appoint or employ any firm, body corporate or association as its manager – Section 384. A manager must be individual.

Manager may be appointed or re- appointed not more than five years at a time – Section 317

Restriction on the number of companies of which a person may be appointed manager – Section 386

No company shall appoint or employ any person as manager, if he is either the manager or the managing director of any other company, except if he is the manager or managing director of one, and not more than one, other company.

Compensation for loss of office not permissible except to managing or whole-time directors or to directors who are managers - Section 318

4. CHAIRMAN

Unless the articles of the company otherwise provide, the members personally present at the meeting shall elect one of themselves to be the chairman thereof on a show of hands – Section 175

• The Chairman must ascertain that a quorum to constitute the meeting prescribed is present.
• Proceedings are conducted in a proper manner
• Observe strict impartially.
• To ensure that all the participating directors get equal opportunity to express their views.
• May allow any additional business to be transacted either with the consent of the meeting or at his own discretion