PROCEDURE FOR APPOINTMENT OF MANAGING DIRECTOR.

Who Is Managing Director?

A Managing Director is someone who is responsible for the daily operations of a company, organization, or corporate division. This position is a part of the executive management of a company that is responsible for the day to day management of the company.

What is Managing Director under Companies Act, 2013?

As per Section 2(54) of the Companies Act, 2013, a “Managing Director” means a director who, by virtue of the articles of a company or an agreement with the company or a resolution passed in its general meeting, or by its Board of Directors, is entrusted with substantial powers of management of the affairs of the company and includes a director occupying the position of managing director, by whatever name called.

In other words, the Managing Director is a person who is entrusted with substantial powers of management of the affairs of the company. This position falls under the definition of “Key Managerial Personnel” under the Companies Act, 2013.

PROCEDURE  FOR APPOINTMENT OF MANAGING DIRECTOR

1. In case of appointment of managing director/whole-time director, other than the existing directors, first, they will be appointed as an additional director by the directors of the company.

2. Arrange the following documents from the appointee:

• Digital Signature Certificate
• Director Identification Number
• Consent in writing to act as managing director/whole-time director.
• Disclosure of interest by director in Form MBP-1.

3. Prepare a notice of board meeting along with draft resolution(s) to be passed in the board meeting.

4. Convene board meeting and pass the following board resolution:

• Appointment of additional director, if required.
• Appointment/re-appointment of a director as managing director or whole-time director of the company.
• Authorization to any director for necessary fillings of e-Form(s).

5. Prepare draft minutes of the board meeting and circulate, within a period of fifteen days from the date of conclusion of that meeting, to all directors, by hand/speed post/registered post/courier/e-mail or by any recognized electronic means, for their comment(s).

6. Issue letter of appointment to the appointee.

7. Obtain disclosure of interest by the director under Section 184 of the Companies Act, 2013 in Form MBP-1. [in case of re-appointment of existing director or in case of a person appointed as an additional director.]

8. File e-Form DIR-12 along with attachments with the Registrar of Companies regarding the appointment of director as an additional director and simultaneously as a managing director/whole-time director.

9. File e-form MGT-14 for board resolution along with attachments with the Registrar of Companies regarding appointment or variation in terms of appointment of Managing Director.

10. Make necessary entries in the register of directors, key managerial personnel and their shareholding.