Every Listed Company and every other Public Company having a paid-up share capital of ten crore rupees or more shall have whole-time key managerial personnel. [Rule 8 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014]
Key Managerial Personnel in relation to a Company, means
- Chief Executive Officer or the Managing Director or the Manager
- The Company Secretary
- The Whole-time Director
- The Chief Financial Officer
- Such other officer, not more than one level below the directors who is in whole-time employment, designated as Key Managerial Personnel by the Board
- Such other officer as may be prescribed.
- No company shall appoint or employ at the same time a Managing Director and a Manager.
- No company shall appoint or re-appoint any person as its Managing Director or Whole-time Director for a term exceeding five years at a time.
- No re-appointment shall be made earlier than one year before the expiry of his term.
- No company shall appoint or continue the employment of any person as Managing Director or Whole-time Director who
- is below the age of twenty-one years or has attained the age of seventy years
- is an undischarged insolvent or has at any time been adjudged as an insolvent
- has at any time suspended payment to his creditors or makes, or has at any time made, a composition with them
- has at any time been convicted by a court of an offence and sentenced for a period of more than six months.
- A Managing Director or Whole-time Director shall not hold office in more than one company except in its subsidiary company at the same time. If he is 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.
- Company shall pass a Special Resolution for the appointment of Managing Director or Whole-time Director under the following situations only
- If the person so appointed has attained the age of 70 years.
- If the remuneration payable exceeds the prescribed limit.
- Approval of Central Government shall be required where
- Appointment of MD or WTD is at variance to the conditions specified in Part I of Schedule V.
- No Special Resolution is passed for the appointment of a person as MD or WTD who has attained the age of 70 years.
Following Procedure is to be followed
- Obtain Consent and Declaration
Company shall obtain a declaration of disqualification in Form DIR-8 from the person proposed to be appointed as a Managing Director or Whole-time Director in the Company.
- Meeting of Nomination and Remuneration Committee
Where a Company is required to constitute a Nomination and Remuneration Committee under section 178, shall receive a recommendation from the committee for the appointment and remuneration of the MD or WTD. [For convening meeting of Nomination and Remuneration Committee, Refer the Procedure for Conducting Nomination and Remuneration Committee Meeting].
- Convene a Meeting of Board of Directors [As per Section 173 & Secretarial Standard-1 (SS-1)]
- Issue Notice of Board Meeting to all the Directors of Company at their addresses registered with the Company, at least 7 days before the date of Board Meeting. A shorter notice can be issued in case of urgent business.
- Attach Agenda, Notes to Agenda and Draft Resolution with the Notice. Notice shall include the terms and conditions for such appointment and remuneration payable to the MD or WTD.
- Hold a meeting of Board of Directors and pass Board Resolution
- to appoint a MD or WTD and fix terms and conditions of such appointment subject to approval of members of the Company
- to issue an appointment letter to the MD or WTD
- to fix day, date, time and venue for holding General Meeting of the Company
- to approve the draft notice of General Meeting along with explanatory statement annexed to the notice as per requirement of the Section 102 of the Companies Act, 2013
- to authorize the Director or Company Secretary to sign and issue notice of the General Meeting and to do such acts, deeds and things as may be necessary to give effect to the Board’s decision.
- Listed Company shall submit the disclosure of such appointment to the Stock Exchange as soon as reasonably possible but not later than 30 minutes from the date of the Board Meeting and post the same on the website of the Company within 2 working days. [Regulation 30 & 46(3) of the SEBI (LODR) Regulations, 2015]
- Prepare and Circulate Draft Minutes within 15 days from the conclusion of the Board Meeting, by Hand/Speed Post/Registered Post/Courier/E-mail to all the Directors for their comments. [Refer the Procedure for Preparation and Signing of Minutes of Board Meeting]
- File Form MGT-14 with ROC
Company shall file a copy of Board Resolution with the ROC in form MGT-14 within 30 days of passing of such resolution.
- Convene General Meeting (Section 96, 100 and Secretarial Standard-2 (SS-2)]
- Notice of General Meeting shall be given at least clear 21 days before the actual date of a General Meeting in writing, by hand or by ordinary post or by speed post or by registered post or by courier or by facsimile or by e-mail or by any other electronic means or a Shorter Notice can be issued with the consent of at least majority in number and ninety five percent of such part of the paid up share capital of the company giving a right to vote at such a meeting in accordance with Section 101.
- Notice will be sent to all the Directors, Members, Auditors of Company, Secretarial Auditor, Debenture Trustees and to others who are entitled to receive the notice of the General Meeting.
- Notice shall specify the day, date, time and full address of the venue of the Meeting and contain a statement on the business to be transacted at the Meeting.
- Hold the General Meeting on fixed day and pass an Ordinary Resolution/Special Resolution as the case may be for appointment of MD or WTD and payment of his/her remuneration.
- Listed Companies shall disclose the proceedings of General Meeting to the Stock Exchange within 24 hours from the conclusion of General Meeting and same shall be posted on the website of the company within 2 working days. [Regulation 30 and 46(3) of the SEBI (LODR) Regulations, 2015]
- Listed Companies shall submit to the stock exchange the details of the voting results within two working days from the conclusion of the meeting and post the same on the website of the Company. [Regulation 44 of the SEBI (LODR) Regulations, 2015]
- Prepare the minutes of General Meeting, get them signed and compile accordingly. [Refer the Procedure for Preparation and Signing of Minutes of General Meeting].
- File Form DIR-12 with ROC
Company shall file the particulars of appointment of MD or WTD to ROC in Form DIR-12 within 30 days of such appointment along with the following documents
- Certified true copy of the Resolution
- Form 8- Declaration of Disqualification
- Letter of Appointment
- Details of Interest in any other entity
- Any other relevant document.
- File Form MR-1 with ROC
Company shall file the return of appointment of MD or WTD in Form MR-1 with ROC within 60 days of such appointment along with the following documents
- Certified true copy of the Board’s Resolution
- Certified true copy of the Shareholders’ resolution along with explanatory statement
- Filing of Form MGT-14 with ROC [Section 117]
File Form MGT-14 with the Registrar of Companies within 30 days of passing the Special resolution in the General Meeting, along with following documents as an attachment:
- Certified True Copies of the Special Resolutions along with explanatory statement
- Copy of the Notice of meeting sent to members along with all the annexure
- Copy of Attendance Sheet of General Meeting
- Shorter Notice Consent, if any.
- Making Necessary entries in Statutory Registers
Company shall make necessary entries in the Register of Director and Key Managerial Personals and Registers of contract or arrangements in which Directors are interested in Form MBP-4.
- Issuing of General Notice for Central Government Approval [Section 201(2)]
- Company shall issue a General Notice to the members indicating the nature of the application proposed to be made before any application is made to the Central Government.
- Such notice shall be published at least once in a newspaper in the principal language of the district in which the registered office of the company is situated and circulating in that district, and at least once in English in an English newspaper circulating in that district.
- The copies of the notices, together with a certificate by the company as to the due publication thereof, shall be attached to the application.
- File an application to the Central Government [Section 201(2) and Rule 7 of the Companies (Appointment and Remuneration of Managerial Personnel0 Rules, 2014
Company shall make an application to the Central Government in Form MR-2 within 90 days from the date of such appointment and shall be accompanied by fee as may be specified for the purpose.
And on receipt of approval from Central Government, the appointment process shall complete.
- Making the disclosure of the Central Government approval [Regulation 30 and 46(3) of the SEBI (LODR) Regulations, 2015]
Listed Company shall disclose to stock exchange(s) about the approval of the Central Government as soon as reasonably possible but not later than the following:
- within twelve hours from the occurrence of the event or information, in case the event or information is emanating from within the listed entity
- twenty four hours from the occurrence of the event or information, in case the event or information is not emanating from within the listed entity, from the date of receipt of approval letter and same shall be posted on the website of the company within 2 working day.
- File Necessary Amendment Application under following Acts
- Goods and Services Act
- Shops & Establishment Act
- Factories Act
- Foreign Exchange Management Act
- Inter-State Migrant workmen Act
- Private Security Agency Act
- Other Labour Laws
- Industry Specific Laws
The Ministry of Corporate Affairs had notified Companies (Appointment and Qualification of Directors) Amendment Rules, 2023 (dated: 20th January, 2023) by which in form DIR-12:
- attachment DIR-2 is not require to be separately attached to the form rather to be certified in the form DIR-12 itself by the director
- in attachment DIR-8. Now, the Director shall be to inform about personal disqualifications u/s 164(1) alongwith company related disqualifications u/s 164(2) and Company shall file Form DIR-9 with RoC within 30 days of receipt of DIR-8.
- purpose of DIR-12 shall be selected as appointment due to disqualification of all the existing directors or appointment by liquidator/IRP/RP added in addition to the existing purposes as the case may be and SRN of INC-28 to be mentioned and order of NCLT to be attached, if applicable