Query relating managing directors/kmp appointment
Rahul Lahiri
(Querist) 28 April 2016
This query is : Resolved
1. Mr X was appointed as Wholetime Director of a Company for a period of 3 years in terms of the applicable provisions of the Companies Act, 2013. His agreement with the company was executed on 01/07/2014 which was valid till 30/06/2017.
2. As per the company’s policy, a person can be in fulltime employment of the company till he attains the age of 58 years. On 28/06/2016, Mr X would be attaining the age of 58 years which entails him to vacate his office. But the he company considering his vast expertise in the concerned industry, wishes to extend his services for a further term of 3 years i.e from 29/06/2016 to 28/06/2019 (his age will be 61 years then) with a new designation as Managing Director of the Company.
3. Now if Mr X will be holding the position as Managing Director of the company on remuneration.
4. He is further proposed to act as Managing Director in another associate company, wherein he will be getting remuneration.
Now our query is as below:
Query 1. Had Mr X continued to be the Wholetime Director of the Company, he would have been eligible for PF, Gratuity, leave encashment and other benefits as applicable to the general employees of the company. But in case his extension of service is not made as an employee but a contractual retainer - will it restrict him from getting the benefits of employment viz. PF, Gratuity, leave encashment and other benefits as applicable to the general employees of the company? As we understand, PF he can continue even after 58 years, but not the pension fund.
Query 2. As per the definition of Wholetime Director in the Companies Act 2013 – a Wholetime Director shall include a director who is in whole time employment of the company. Now if Mr X continues to be in fulltime employment of the company as a Managing Director- he may be deemed to be the Wholetime Director of the company. Again, if he wishes to be a Managing Director in another associate company, on remuneration- whether there is any legal impediment restricting him from doing so? As the companies act clearly mentions that a person cannot be a wholetime director in more than one company. It is mention worthy here that a person can hold the position of Managing Director in two companies.
Plz give your expert Legal views.
P. Venu
(Expert) 29 April 2016
The matter requires professional consultation.
Advocate/CS Sanjeev Kataria
(Expert) 30 April 2016
Dear sir, an individual can be MD irrespective of age in private limited co, the max age can be 70 years as per SEBI Regs in case of listed public, it is also not necessary that MD should be in employment. also see articles of association of your company
Rajendra K Goyal
(Expert) 30 April 2016
Discuss with local professional consultant.
