{"id":43074,"date":"2022-05-07T14:32:44","date_gmt":"2022-05-07T09:02:44","guid":{"rendered":"https:\/\/corpbiz.io\/learning\/?p=43074"},"modified":"2022-05-07T14:34:42","modified_gmt":"2022-05-07T09:04:42","slug":"whole-time-and-managing-director-know-the-difference","status":"publish","type":"post","link":"https:\/\/corpbiz.io\/learning\/whole-time-and-managing-director-know-the-difference\/","title":{"rendered":"Whole Time and Managing Director &#8211; Know the Difference"},"content":{"rendered":"\n<p class=\"has-drop-cap\">According\nto <strong><em>Section\n2(51) of the Companies Act (2013)<\/em><\/strong>, Whole Time and Managing Director are\nconsidered Key Managerial Personnel of a company. In simple terms, a Managing\nDirector is an individual who is responsible for administering the daily\noperations of a company. He is also liable to plan, control, and direct the\ncompany&#8217;s functioning. On the other side, a Whole Time Director includes a\ndirector who is in the company&#8217;s whole-time employment, commits all of his time\n&amp; attention to the company&#8217;s affairs in question, and has a major personal\ninterest in the company as their income source. In this blog, we will discuss\nthe difference between Whole Time and Managing Director.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">What is the\nMeaning of Whole Time and Managing Director?<\/h2>\n\n\n\n<p>Before\nwe discuss the difference between Whole Time and Managing Director, let\u2019s first\nunderstand the individual meaning of Whole Time and Managing Director.<\/p>\n\n\n\n<ul><li><strong><em>Managing Director (MD)<\/em><\/strong>:\nAccording to <strong><em>Section 2(54) of the Companies Act, 2013, <\/em><\/strong>Managing Director\nmeans a director who, by virtue of:<\/li><\/ul>\n\n\n\n<ol><li>An agreement with the company;<\/li><li>A resolution passed by its BoDs\n(Board of Directors);<\/li><li>The articles of the company;<\/li><li>A resolution passed by its\ngeneral meeting.<\/li><\/ol>\n\n\n\n<p>It\nis assigned with significant powers of management of the company\u2019s affairs and\ncomprises a director occupying the managing director position. The explanation\nof the definition particularly provides that the power to perform clerical or\nmanagerial acts of a routine nature on being certified or authorised by the\nBoard of Directors (BoDs) shall not be considered to fall within the\nconsiderable powers of management. Such acts comprise:<\/p>\n\n\n\n<ol><li>Power to endorse &amp; draw any\nnegotiable instrument;<\/li><li>Power to affix the company\u2019s\ncommon seal to any document;<\/li><li>Power to sign any certificate\nof share\/to direct registration of transfer of any share;<\/li><li>Power to endorse &amp; draw any\ncheque from the company\u2019s account in any bank.<\/li><\/ol>\n\n\n\n<p><strong><em>Appointment of Managing Director:<\/em><\/strong><\/p>\n\n\n\n<ol><li>Restriction: A company shall not appoint a Manager and a Managing Director (MD) at the same time.<\/li><li>Appointment Period: A Managing Director (MD) can be appointed for a maximum term of five years.<\/li><li>Disqualification for an Appointment: No company shall appoint\/continue the employment of any individual as Managing Director who:<\/li><li>Is an undischarged insolvent\/has at any time been adjudged as an insolvent;<\/li><li>Has at any time been sentenced of an offence by a court &amp; sentenced for a time exceeding six months;<\/li><li>Is below 21 years or has reached 70 years of age;<\/li><li>Has suspended payment to their creditors or makes or has made a composition with them at any given time.<\/li><\/ol>\n\n\n\n<ul><li><strong><em>Conditions or terms to be\nfulfilled for appointment of MD without the Central Government&#8217;s approval:<\/em><\/strong><\/li><\/ul>\n\n\n\n<ol><li>The person or an individual is\na resident of India <strong><em>(Schedule V of the Act, 2013)<\/em><\/strong>;<\/li><li>An individual has not been sentenced\nto imprisonment for any term or a fine exceeding Rs. 1000\/- for conviction\nunder any of the acts prescribed in the Schedule mentioned above;<\/li><li>The person or an individual has\nnot been detained for any period under the <strong><em>Conservation of Foreign Exchange &amp;\nPrevention of Smuggling Activities Act, 1974<\/em><\/strong>.<\/li><\/ol>\n\n\n\n<ul><li><strong><em>Meaning of Whole-Time Director<\/em><\/strong>:\nThe terms Whole Time Director and Director in whole-time employment were used\nin several sections. As an outcome, a request was made seeking clarifications\nas to whether\/or not the two terms can be considered synonyms. This position\nwas explained by the Department of Company Affairs, which specified that the\ntwo terms are synonymous and can be used interchangeably. <\/li><\/ul>\n\n\n\n<p>Moreover,\nthere was also confusion as to whether whole-time employment is a Whole-Time\nDirector. The Company Law Board clarified that a whole-time employee appointed\nas a company&#8217;s director is in the position of a Whole-Time Director. According\nto <strong><em>Section\n2(94) of the Act, 2013, <\/em><\/strong>Whole-Time Director includes a director in the\nwhole-time employment of the company. This definition is inclusive and refers\nto a director who has been in employment with the company on a full-time basis\n&amp; is entitled to receive remuneration.<\/p>\n\n\n\n<p><strong><em>Section\n203 of the Act, 2013, read with Rule 8 of the Companies Rules, 2014, provides\nthat:<\/em><\/strong><\/p>\n\n\n\n<ul><li>Every listed company;<\/li><li>Every other public company has\na paid-up share capital of Rs. 10 crores or more. Shall appoint an MD, or CEO\nor Manager and in their absence, a Whole Time Director as a whole-time Key Managerial\nPersonnel.<\/li><\/ul>\n\n\n\n<p><strong><em>Appointment of Whole Time Director<\/em><\/strong>: The conditions for the appointment of a Whole Time Director are the same as Managing Director as provided hereinbefore as the same is governed by Section 196 read with Schedule V of the <strong>Companies Act, 2013<\/strong><sup><a href=\"https:\/\/en.wikipedia.org\/wiki\/Companies_Act_2013\"><strong>[1]<\/strong><\/a><\/sup>.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">Difference\nBetween Whole Time and Managing Director<\/h2>\n\n\n\n<p>The position of Whole Time and Managing Director can be differentiated as under:<\/p>\n\n\n\n<table class=\"table table-bordered\"><tbody><tr><td>\n  <strong>Basis\n  <\/strong>\n  <\/td><td>\n  <strong>Managing\n  Director <\/strong>\n  <\/td><td>\n  <strong>Whole\n  Time Director<\/strong>\n  <\/td><\/tr><tr><td>\n  <strong>Definition<\/strong>\n  <\/td><td>\n  The Managing Director represents\n  the Board in the regular activities of the company.\n  <\/td><td>\n  The Whole Time Director is a\n  director\n  <\/td><\/tr><tr><td>\n  <strong>Power\n  <\/strong>\n  <\/td><td>\n  A Managing Director (MD)\n  possesses substantial powers of management.\n  <\/td><td>\n  The powers of a Whole Time\n  Director are given in their terms of appointment. Therefore, he or she\n  doesn\u2019t have discretionary or arbitrary power to take decisions on policy\n  matters.\n  <\/td><\/tr><tr><td>\n  <strong>Holding\n  Office<\/strong>\n  <\/td><td>\n  An individual or a person can\n  be appointed as MD of one of the other companies providing the same is\n  approved by a Board Resolution with joint consent.\n  <\/td><td>\n  An individual cannot be a\n  Whole Time Director in more than one company except in a subsidiary company\n  at the same time. \n  <\/td><\/tr><tr><td>\n  <strong>Manager\n  <\/strong>\n  <\/td><td>\n  A person or an individual can\n  be appointed as Managing Director (MD) of one other company provided the same\n  is approved by a Board Resolution with joint consent.\n  <\/td><td>\n  A company can appoint both a\n  Whole Time and a manager at the same time.\n  <\/td><\/tr><tr><td>\n  <strong>Appointment<\/strong>\n  <\/td><td>\n  Resolution is passed at the\n  board meeting. Shareholders\u2019 consent is not required.\n  <\/td><td>\n  A resolution is passed at the\n  AGM (Annual General meeting). Except when the Whole Time Director is\n  appointed as a Trustee for debenture holders.\n  <\/td><\/tr><\/tbody><\/table>\n\n\n\n<h2 class=\"wp-block-heading\">Conclusion<\/h2>\n\n\n\n<p>However, the procedure &amp; conditions of Whole Time and Managing Director are more or less the same; there are some noteworthy differences between the Whole Time and Managing Director. However, as both are considered to be the <a href=\"https:\/\/corpbiz.io\/learning\/appointment-of-key-managerial-personnel\/\"><strong>Key Managerial Personnel<\/strong><\/a> of the company, their key role is to oversee a company&#8217;s performance, investment, operations and provide strategic guidance and direction to the Board to make sure that the objectives of the company are successfully completed. <\/p>\n\n\n\n<p class=\"text-left\"><b>Read our Article<\/b>:<mark style=\"background: #fffd03 !important;\"><a href=\"https:\/\/corpbiz.io\/learning\/directors-under-companies-act-2013\/\">Directors under Companies Act, 2013<\/a><\/mark><\/p>\n","protected":false},"excerpt":{"rendered":"<p>According to Section 2(51) of the Companies Act (2013), Whole Time and Managing Director are considered Key Managerial Personnel of a company. In simple terms, a Managing Director is an individual who is responsible for administering the daily operations of a company. He is also liable to plan, control, and direct the company&#8217;s functioning. On [&hellip;]<\/p>\n","protected":false},"author":35,"featured_media":43079,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":[],"categories":[120],"tags":[2326],"acf":{"service_id":"408"},"authorName":"Karan Singh","authorImageUrl":"https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2022\/01\/processed-1-150x150.jpeg","authorDescription":"A legal writing enthusiast, a wanderer, and a zealous reader. After gaining a lot of knowledge about the diverse legal topics and developing research skills, Karan joined the league of legal content writers to deliver quality-rich blogs.","postViews":21527,"readingTime":4,"_links":{"self":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts\/43074"}],"collection":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/users\/35"}],"replies":[{"embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/comments?post=43074"}],"version-history":[{"count":9,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts\/43074\/revisions"}],"predecessor-version":[{"id":43084,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts\/43074\/revisions\/43084"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/media\/43079"}],"wp:attachment":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/media?parent=43074"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/categories?post=43074"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/tags?post=43074"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}