{"id":6640,"date":"2020-04-13T10:41:03","date_gmt":"2020-04-13T05:11:03","guid":{"rendered":"https:\/\/corpbiz.io\/learning\/?p=6640"},"modified":"2022-09-09T15:15:51","modified_gmt":"2022-09-09T09:45:51","slug":"appointment-of-key-managerial-personnel","status":"publish","type":"post","link":"https:\/\/corpbiz.io\/learning\/appointment-of-key-managerial-personnel\/","title":{"rendered":"Appointment of Key Managerial Personnel"},"content":{"rendered":"\n<p class=\"has-drop-cap\">Every company is required to appoint key managerial personnel as per provisions laid down under the companies act, 2013 after getting the approval for <a href=\"https:\/\/corpbiz.io\/company-registration\"><strong>company registration<\/strong><\/a>. These managerial staffs are top decision-maker of a company and take care of day to day activities to further growth of the company. This personnel is appointed by the board of directors. Directors of the company are accommodated with numerous responsibilities, and one of the duties is an appointment to top-level managerial personnel. As bigger is the company bigger is the vision of directors.&nbsp; Top companies appoint top managerial personnel as bigger is the company bigger is the role of officers. <\/p>\n\n\n\n<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_82_2 counter-hierarchy ez-toc-counter ez-toc-grey ez-toc-container-direction\">\n<div class=\"ez-toc-title-container\">\n<p class=\"ez-toc-title ez-toc-toggle\" style=\"cursor:pointer\">Page Contents<\/p>\n<span class=\"ez-toc-title-toggle\"><a href=\"#\" class=\"ez-toc-pull-right ez-toc-btn ez-toc-btn-xs ez-toc-btn-default ez-toc-toggle\" aria-label=\"Toggle Table of Content\"><span class=\"ez-toc-js-icon-con\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/span><\/a><\/span><\/div>\n<nav><ul class='ez-toc-list ez-toc-list-level-1 eztoc-toggle-hide-by-default' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/corpbiz.io\/learning\/appointment-of-key-managerial-personnel\/#Which_companies_are_required_to_appoint_key_managerial_personnel\" >Which companies are required to appoint key managerial\npersonnel?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/corpbiz.io\/learning\/appointment-of-key-managerial-personnel\/#Who_all_are_referred_as_Key_managerial_personnels_KMP\" >Who all\nare referred as Key managerial personnel\u2019s (KMP)?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/corpbiz.io\/learning\/appointment-of-key-managerial-personnel\/#Procedure_of_appointment_of_key_managerial_personnel\" >Procedure\nof appointment of key managerial personnel:<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/corpbiz.io\/learning\/appointment-of-key-managerial-personnel\/#Important_provisions_wrt_key_managerial_personnel\" >Important\nprovisions w.r.t. key managerial personnel:<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/corpbiz.io\/learning\/appointment-of-key-managerial-personnel\/#Role_and_responsibilities_of_key_managerial_personnel\" >Role\nand responsibilities of key managerial personnel:<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/corpbiz.io\/learning\/appointment-of-key-managerial-personnel\/#Penalty_amount_in_case_of_contravention_with_provisions_of_law\" >Penalty\namount in case of contravention with provisions of law:<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-7\" href=\"https:\/\/corpbiz.io\/learning\/appointment-of-key-managerial-personnel\/#Conclusion\" >Conclusion:<\/a><\/li><\/ul><\/nav><\/div>\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Which_companies_are_required_to_appoint_key_managerial_personnel\"><\/span>Which companies are required to appoint key managerial\npersonnel?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>As per the provisions of <em><strong>Section 203(1) of the Companies Act, 2013<\/strong><\/em><sup><a href=\"https:\/\/www.mca.gov.in\/content\/mca\/global\/en\/acts-rules\/ebooks.html\"><strong>[1]<\/strong><\/a><\/sup> and as per <strong><em>Rule 8 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules of 2014<\/em><\/strong>, every company is required to appoint key managerial personnel who have:<\/p>\n\n\n\n<ul><li>Any listed companies<\/li><li>Any public limited company which have paid-up capital of INR 10 Crores (Rupees Ten Crore) or above. Those companies are required to appoint full-time managerial person&nbsp; as Managing director of the company or CEO or full-time director; and Chief Financial Officer (CFO); and Company Secretary <\/li><\/ul>\n\n\n\n<p>Further, every company, as mentioned above, shall appoint\na full-time company secretary as per Further, as per the Rule 8 A of Companies\n(Appointment and Remuneration of Managerial Personnel) Rules of 2014.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Who_all_are_referred_as_Key_managerial_personnels_KMP\"><\/span>Who all\nare referred as Key managerial personnel\u2019s (KMP)?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>KMP is to be appointed by the board of directors who are responsible for running day to day activities of the company. These officers are selected as per their areas of expertise, depending on the vision of the company. These officers may or may not be directors of the company, but they have to work as per directors given by the board of directors. The term &#8216;Key managerial personnel&#8217;s (KMP)&#8217; has been defined under section 2(51) and section 203 of the Companies Act, 2013, which shall include from following:<\/p>\n\n\n\n<figure class=\"wp-block-image\"><img decoding=\"async\" width=\"576\" height=\"339\" src=\"https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2020\/04\/image-37.png\" alt=\"referred as Key managerial personnel\" class=\"wp-image-6641\" srcset=\"https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2020\/04\/image-37.png 576w, https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2020\/04\/image-37-300x177.png 300w\" sizes=\"(max-width: 576px) 100vw, 576px\" \/><\/figure>\n\n\n\n<ul><li>The Managing Director; or Chief Executive Officer (CEO); or the manager of the company<\/li><li>Chief Financial Officer (CFO) of the company<\/li><li>Full-time director of the company<\/li><li>The company secretary<\/li><li>Any other officer not below the rank of full-time director<\/li><li>Any other such officer as prescribed by law<\/li><\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Procedure_of_appointment_of_key_managerial_personnel\"><\/span>Procedure\nof appointment of key managerial personnel:<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>All full-time key managerial staff to be appointed by the board of directors. The selection is to be made by passing board resolution, which contains several terms &amp; conditions of appointment of managerial personnel along with mentioning about their remuneration.<\/p>\n\n\n\n<div class=\"shadow1\"><ul><li>Restrictions on holding a position in\nmore than one company<\/li><li>A full-time key managerial personnel\ncannot hold office in more than 1 company except in any subsidiary company<\/li><li>A key managerial personnel can be\nappointed as director of any company after getting approval from the board of\ndirector<\/li><li>A company may appoint a person as\nManaging director holding position In any other company after passing board\nresolution and servicing notices to all directors of the company <\/li><li>As per the prescribed law if there is\nany vacation in position of any fulltime key managerial personnel that to be\nfilled within a time period of 6 months from the date of such vacation.<\/li><\/ul><\/div>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Important_provisions_wrt_key_managerial_personnel\"><\/span>Important\nprovisions w.r.t. key managerial personnel:<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Companies\nact, 2013 have provided certain important provisions that deal with appointment\nand other key requirements related to key managerial personnel. One of the\nimportant provisions in section 196 and section 203 of the companies act, 2013,\nwhich deals with appointment and other key provisions of managing director of\nthe company; Full-time director, or any manager of the company. <\/p>\n\n\n\n<p><strong><em>&nbsp;\u201c203.<\/em><\/strong><em>&nbsp;<strong>Appointment of key\nmanagerial personnel<\/strong><\/em><em><\/em><\/p>\n\n\n\n<p><em>(1) Every company belonging to such class or classes of companies\nas may be<\/em><em>\n<\/em><em>prescribed shall have the following whole-time key\nmanagerial personnel,\u2014<\/em><em><\/em><\/p>\n\n\n\n<p><em>(i) managing director, or Chief Executive Officer or manager and\nin their absence,<\/em><em>\n<\/em><em>a whole-time director;<\/em><em><\/em><\/p>\n\n\n\n<p><em>(ii) company secretary; and<\/em><em><\/em><\/p>\n\n\n\n<p><em>(iii) Chief Financial Officer\u201d<\/em><em><\/em><\/p>\n\n\n\n<p><strong><em>As per the said provisions following apprehensions can be made:<\/em><\/strong><\/p>\n\n\n\n<ul><li>A\nManaging director; or a Fulltime director; or a Manager of a company can be\nappointed only for a period of 5 years;<\/li><li>They\ncan be reappointed by board of directors for another term. But that appointment\nis to be made before the expiry of current term but not exceeding 1 year before\nexpiry of current tenure.<\/li><li>Disqualification\nof Key Managerial personnel: A Managing director; or a Fulltime director; or a\nManager of a company can be disqualified, and no company shall appoint them in\ncase:<\/li><li>If\nhave not attained the age of 21 years or have turned 70 years on the date of\nappointment;<\/li><li>In\ncase person has turned 70, his appointment can be made by passing a special\nresolution by the board of directors justifying the reasonable statement of\nsuch appointment;<\/li><li>A\nperson who is undischarged insolvent or declared as insolvent anytime;<\/li><li>In\ncase suspended payment to its creditors anytime;<\/li><li>Person\nwho has been convicted by the court of law for sentence more than period of 6\nmonths.<\/li><\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Role_and_responsibilities_of_key_managerial_personnel\"><\/span>Role\nand responsibilities of key managerial personnel:<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Certain\nroles and responsibilities of key managerial person are as mentioned below and\ndescribed:<\/p>\n\n\n\n<ul><li>All the financial statements to be affixed and signed by key managerial personnel such as CEO, or CFO; or Company secretary of the company;<\/li><li>Key managerial personnel to sign and execute all contracts, agreements or any important document on behalf of the company<\/li><li>Key managerial personnel is prohibited from dealing in any trading activities or dealing in any securities<\/li><li>There is mentioning of name and designation of key managerial personnel in annual report or documents submitted with ROC<\/li><li>Shareholding registration in company or its subsidiaries<\/li><li>Every Key managerial personnel is required to disclose its interest in any company before the board within 30 days from date of its appointment<\/li><\/ul>\n\n\n\n<figure class=\"wp-block-image\"><img decoding=\"async\" width=\"612\" height=\"363\" src=\"https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2020\/04\/image-38.png\" alt=\"roles and responsibilities of key managerial person\" class=\"wp-image-6644\" srcset=\"https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2020\/04\/image-38.png 612w, https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2020\/04\/image-38-300x178.png 300w\" sizes=\"(max-width: 612px) 100vw, 612px\" \/><\/figure>\n\n\n\n<ul><li>Key\nmanagerial personnel has right to attend audit committee meeting but shall not\nhave right to vote<\/li><li>A\nperson cannot be appointed as director of said company who has family member or\nrelative as appointed as key managerial position in the company<\/li><li>The\nnomination of committee to recommend policies related to remuneration or other\nprovisions w.r.t. Key managerial personnel<\/li><li>Discharge\nof personal liability in case of any undue influence or undue benefit proved\nagainst company<\/li><li>To\nensure company complies with important provisions and standards as prescribed\nby law;<\/li><li>To\ndischarge other such duties as assigned<\/li><li>To\nprovide director of company such guidelines as required in order to discharge\ntheir duties<\/li><li>To\nfacilitate conduction of such meetings as required.<\/li><li>To\nassist board of directors in conducting affairs of company properly<\/li><li>To\nassist board of directors in ensuring and complying with policies as required by\ncompany such as good governance, corporate governance and such other policies\nas required<\/li><li>To\ndischarge other such duties as assigned by board and law<\/li><\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Penalty_amount_in_case_of_contravention_with_provisions_of_law\"><\/span>Penalty\namount in case of contravention with provisions of law:<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Any\ncompany or its officer who contravenes the provisions as laid down w.r.t. Key\nmanagerial personnel shall be liable to pay penalty. Every defaulting company\nshall be liable to pay penalty amount of Rs. 100000 (rupees one lakh) which may\nextend to amount of Rs. 500000 (rupees five lakh). In case of director or any\nofficer in default penalty amount may extend to Rs. 50000\/- (rupees fifty\nthousand). In case of continuing default, the penalty may extend to Rs. 1000\/-\n(rupees thousand) per day till default continues.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Conclusion\"><\/span>Conclusion:<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>In order to facilitate smooth functioning of the company, Key managerial personnel play an important role and also hold a very important position in the company. Companies act, 2013 has provided certain provisions which describe appointment, roles and responsibilities of key managerial personnel. Further via amendment of 2017 provisions has been laid w.r.t. Managerial remuneration, as earlier approval of central government, was required which is no longer required.<\/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\/appointment-of-additional-director-in-a-company\/\">Appointment of Additional Director in a Company as per Companies Act, 2013\n<\/a><\/mark><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Every company is required to appoint key managerial personnel as per provisions laid down under the companies act, 2013 after getting the approval for company registration. These managerial staffs are top decision-maker of a company and take care of day to day activities to further growth of the company. This personnel is appointed by the [&hellip;]<\/p>\n","protected":false},"author":21,"featured_media":6646,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":[],"categories":[415,120],"tags":[480],"acf":{"service_id":"321"},"authorName":"Navdeep Kaur","authorImageUrl":"https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2020\/03\/IMG_20190122_114933.jpg","authorDescription":"Navdeep is working as legal counsel in Enterslice group companies having more than 4 years of experience. She has expertise in legal, corporate and regulatory matters.","postViews":16043,"readingTime":5,"_links":{"self":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts\/6640"}],"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\/21"}],"replies":[{"embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/comments?post=6640"}],"version-history":[{"count":11,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts\/6640\/revisions"}],"predecessor-version":[{"id":48553,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts\/6640\/revisions\/48553"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/media\/6646"}],"wp:attachment":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/media?parent=6640"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/categories?post=6640"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/tags?post=6640"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}