Can anyone become and remain to be CMD of a company

Mr. Rabin, you have not mentioned whether ABC is a public or a  private company.

The following is my opinion, assuming it to be a public company (or a subsidiary of a public co.)

The following resolutions were passed in the above said meeting:

1.    Mr. XYZ was elected as the Chairman-cum-Managing Director of the company for life or till he decides to resign as CMD.

As per Section 317 of Companies Act, 1956: no person can be an MD for more than 5 years.

2.    The Management Control of the company will remain with Mr. XYZ till he continue as CMD and thereafter CMD will be appointed as per the Shareholder Agreement.

The management control lies with the Board of Directors, not just MD.

3.    The share holding pattern of the company will be as follows:

Mr. XYZ and  his nominee/s                     30 %

Mr. LLM                                                    10 %

Mr. LOP                                                      15 %

Mr. JKL                                                       15 %

Mr. ATC                                                      30 %

Mr. JDH                                                      NIL

4.    M/s ABC Co., US to be a wholly owned ( 100% ) subsidiary of M/s ABC Co. Mr. XYZ will act as President and CEO of the M/s M/s ABC Co., US.

As per Section 316 of Companies Act, 1956, you will be required to take approval of the Board before appointing him, if it is a public company, or a subsidiary of a public company

5.    The total number of shares of the US subsidiary company are 1500 shares with a face value of 1$ / per share.

6.    1400 shares will be allotted to M/s ABC Co. and balance 100 shares will be allotted to Mr. XYZ  with an understanding that Mr. XYZ  will transfer back these shares (100 shares in his personal name) at the same face value of 1 $ / per share at the time of his resignation from the present post of CMD of M/s ABC Co.). Mr. XYZ to execute an agreement for the same with M/s ABC Co., separately. On his resignation the 100 share will be transferred to new CMD.

In case 100 shares in the hands of an individual, it can not be a wholly owned subsidiary.

7.   The respective earnings of the 100 shares held by Mr. XYZ individually in the US Company shall be treated as the earnings of M/s ABC Co. Proposed Share-holders agreement to be executed by mid-July 2010.

As per the terms and conditions of the appointment of the MD.

8.    Mr. XYZ to complete his share of investment in proportion to his shareholding in the company immediately upon the signing of the Share-holder’s Agreement (SHA).

As per the terms and conditions of the appointment of the MD.

Please accept my sincere thanks for you great & timely advices in the subject issue which has been made really simple.

What ever the contract says The CMD or any Director is elected by various stake holders as long as he enjoys confidence of stake holder he can remain CMD subject to re election after expiry of 5 years