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A private company has husband and wife as only two directors as well as shareholders. There is no other shareholder. Husband is continuing as a whole time director since 1996 as there was no fixed tenure in his appointment letter. The questions now are :1. Does the Company need to reappoint him with a tenure of 5 years now ? If yes, can he be reappointed now say. in December, 2014 or January, 2015 ? 2. Whether in respect of the Board resolution for his reappointment and remuneration, Section 184 and Section 188 apply ? 3. Will he compulsorily be treated as a KMP ? 4. Whether MR 1 in this case will be filed within 60 days from Board resolution or from General meeting resolution ( as the general meeting will now only be in September, 2015) ?

KMP

Posted By: Manouj agrawaal, fca, partner 10 year(s) ago

This question has been closed if you want to answer,you have to re-open.


    Nilesh Patel

1) I am of the opinion that MR 1 needs to be filed within 60 days of Board Resolution and not AGM resolution. This was also the position under old Act of 1956 and confirmed by DCA. 2) Section 188 is not applicable as appointment of WTD/ MD etc. does not amount to office or place of profit even if remuneration is above rs. 2.5 lacs per month (refer definition u/s 188). 3) I think even Section 184 is not applicable as it applies to contract with Body corporate, firm and other entity in which director is partner, owner or member etc. However, interested director required to give disclosure of his interest

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    Nilesh Patel

1) I am of the opinion that MR 1 needs to be filed within 60 days of Board Resolution and not AGM resolution. This was also the position under old Act of 1956 and confirmed by DCA. 2) Section 188 is not applicable as appointment of WTD/ MD etc. does not amount to office or place of profit even if remuneration is above rs. 2.5 lacs per month (refer definition u/s 188). 3) I think even Section 184 is not applicable as it applies to contract with Body corporate, firm and other entity in which director is partner, owner or member etc. However, interested director required to give disclosure of his interest

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    RAMAMURTHY

I wish to react with reference to one single point i.e. section 197 applies to a public company as it commences with the words "The total managerial remuneration payable by a public company...." Further section 196 (4) and (5) have been included in the draft notification, meaning thereby that it is not clear as to whether the proposed exemption for private companies would apply from 1.4.2014 or not. So it is subject to the exemption that may come but which may depend on what comes out.

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    RAMAMURTHY

I wish to react with reference to one single point i.e. section 197 applies to a public company as it commences with the words "The total managerial remuneration payable by a public company...." Further section 196 (4) and (5) have been included in the draft notification, meaning thereby that it is not clear as to whether the proposed exemption for private companies would apply from 1.4.2014 or not. So it is subject to the exemption that may come but which may depend on what comes out.

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Expert    Ankit Singhi

Yes, need to appoint him in accordance with sec 196 for a tenure of not exceeding 5 years , Further, such WTD shall require to give disclosure of interest in the Board meeting in pursuant to section 184 and WTD shall not participate in such meeting Thus, Company need to appoint more directors to pass a requisite resolution and If has been appointed to a place of profit provision of section 188 would also be applicable. MR-1 is to be filed within 60 days of the General meeting as appointment of WTD shall be approved by board which shall be subject to the approval of shareholders in the AGM (i.e. in September 2015)

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