Managing Director of Company

Last updated : April 13th, 2018 12:46 am

Managing Director of Company

The Managing Director of a company is a director who, by virtue of the articles of association of the company is entrusted with substantial powers of management of the affairs of the company. Hence, a managing director is an individual who, subject to the control and directions of the Board of Directors, has the management of the whole, or substantially the whole of the affairs of the company.

Appointment of Managing Director

A managing director is appointed or reappointed for a term of 5 years. Reappointment for an existing managing director can be made not earlier than one year from the date of expiry of current term. The age limit of a person to be appointed as managing director is 21-70 year. No person below the age of 21 can be appointed as managing director. However, a person above the age of 70 can be appointed as managing director with the authority of a special resolution. In addition to the age limit, the following conditions must be followed during the appointment of managing director.

• He or she cannot be undischarged insolvent or has not at any time been adjudged as an insolvent.
• He or she has not at any time suspended payment to his/her creditors or makes, or has at any time made, a composition with them.
• He or she has not at any time been convicted of an offence and sentenced for a period of more than 6 months.
• He or she has not been sentenced to imprisonment for any period, or to a fine exceeding Rs.1000, for the conviction of an offence under any of the following Acts:
  • the Indian Stamp Act, 1899
  • the Central Excise Act, 1944
  • the Industries (Development and Regulation) Act, 1951
  • the Prevention of Food Adulteration Act, 1954
  • the Essential Commodities Act, 1955
  • the Companies Act, 2013
  • the Securities Contracts (Regulation) Act, 1956
  • the Wealth-tax Act, 1957
  • the Income-tax Act, 1961
  • the Customs Act, 1962
  • the Competition Act, 2002
  • the Foreign Exchange Management Act, 1999
  • the Sick Industrial Companies Act, 1985
  • the Securities and Exchange Board of India Act, 1992
  • the Foreign Trade Act, 1922
  • the Prevention of Money-Laundering Act, 2002
• He or she had not been detained for any period under the Conservation of Foreign Exchange and Prevention of Smuggling Activities Act, 1974.
• He or she is a resident of India
  • For a person to qualify as a resident of India, he or she must have been staying in India for a continuous period of not less than 12 months immediately preceding the date of his or her appointment as a managerial person and who has come to stay in India:
    • for taking up employment in India
    • for carrying on business or vacation in India.
    • This condition is not applicable to companies in Special Economic Zones as notified by the Department of Commerce from time to time.