Appointment
of key managerial personnel:
(1) Every company belonging to
such class or classes of companies as may be prescribed shall have the
following whole-time key managerial personnel,-
(i)
managing director, or Chief Executive Officer or manager and in their absence,
a whole-time director;
(ii)
company secretary; and
(iii)
Chief Financial Officer:
Provided that an individual shall
not be appointed or reappointed as the chairperson of the company, in pursuance
of the articles of the company, as well as the managing director or Chief
Executive Officer of the company at the same time after the date of commencement
of this Act unless,-
(a)
the articles of such a company provide otherwise; or
(b)
the company does not carry multiple businesses:
Provided further that nothing
contained in the first proviso shall apply to such class of companies engaged
in multiple businesses and which has appointed one or more Chief Executive
Officers for each such business as may be notified by the Central Government.
(2) Every whole-time key
managerial personnel of a company shall be appointed by means of a resolution
of the Board containing the terms and conditions of the appointment including
the remuneration.
(3) A whole-time key managerial
personnel shall not hold office in more than one company except in its
subsidiary company at the same time:
Provided that nothing contained
in this sub-section shall disentitle a key managerial personnel from being a
director of any company with the permission of the Board:
Provided further that whole-time
key managerial personnel 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 of key managerial personnel:
Provided also that a company may
appoint or employ a person as its managing director, if he is the managing
director or manager of one, and of not more than one, other company and such
appointment or employment is made or approved by a resolution passed at a
meeting of the Board with the consent of all the directors present at the
meeting and of which meeting, and of the resolution to be moved thereat,
specific notice has been given to all the directors then in India.
(4) If the office of any
whole-time key managerial personnel is vacated, the resulting vacancy shall be
filled-up by the Board at a meeting of the Board within a period of six months
from the date of such vacancy.
(5) If a company contravenes the
provisions of this section, the company shall be punishable with fine which
shall not be less than one lakh rupees but which may extend to five lakh rupees
and every director and key managerial personnel of the company who is in
default shall be punishable with fine which may extend to fifty thousand rupees
and where the contravention is a continuing one, with a further fine which may
extend to one thousand rupees for every day after the first during which the
contravention continues.
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