Managing Director not to be Appointed for more than five Years at a Time
No company can, appoint or employ any individual as its managing director for a term exceeding five years at a time.
However, a person may be re-appointed, re-employed, or his term of office extended by further periods not exceeding five years on each occasion. Such re-appointment, re-employment or extension cannot be sanctioned earlier than two years from the date on which it is to come into force.
This provision does not apply to a private company unless it is a subsidiary of a public company.
The Central Government may grant approval for a period less that the period for which approval is sought.
In case the approval of the Central Government is refused, the appointed person shall vacate his office on the date of communication of the decision of the Central Government to the company and if he omits to do so, he shall be liable to a fine of Rs. 500/- for each day of default.
The Central Government, on information received by it or suo moto, is of the opinion that such appointment made without approval of the Central Government contravenes the conditions given in Schedule XIII, it may refer the matter to the Company Law Board for decision.
On receipt of the order of the Company Law Board against the company,:-a. The company shall be liable to fine of upto Rs. 5000/-b. Every officer of the company in default shall be liable
to a fine of Rs. 10000/-c. The appointment shall be deemed to have come to an end and the appointed person shall in addition to being liable to pay a fine of Rs. 10000/-, refund to the company the entire amount of remuneration received by him from such appointment.
No company can, appoint or employ any individual as its managing director for a term exceeding five years at a time.
However, a person may be re-appointed, re-employed, or his term of office extended by further periods not exceeding five years on each occasion. Such re-appointment, re-employment or extension cannot be sanctioned earlier than two years from the date on which it is to come into force.
This provision does not apply to a private company unless it is a subsidiary of a public company.
The Central Government may grant approval for a period less that the period for which approval is sought.
In case the approval of the Central Government is refused, the appointed person shall vacate his office on the date of communication of the decision of the Central Government to the company and if he omits to do so, he shall be liable to a fine of Rs. 500/- for each day of default.
The Central Government, on information received by it or suo moto, is of the opinion that such appointment made without approval of the Central Government contravenes the conditions given in Schedule XIII, it may refer the matter to the Company Law Board for decision.
On receipt of the order of the Company Law Board against the company,:-a. The company shall be liable to fine of upto Rs. 5000/-b. Every officer of the company in default shall be liable
to a fine of Rs. 10000/-c. The appointment shall be deemed to have come to an end and the appointed person shall in addition to being liable to pay a fine of Rs. 10000/-, refund to the company the entire amount of remuneration received by him from such appointment.
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