Urgent Clarification - Designation as Director-Operations

[Suresh Kumar Vaishraj]

Dear Friends,

Can a company official be designated as Director-Operations, though the individual is not on the Board of the Company and no form no.32 is filed.

Please clarify.

Thanks and Regards,

Suresh Kumar V
Company Secretary
91-9849991201

[Jayashree Chandrasekaran]

A Company is not supposed to designate officials as Directors if they
do not form part of the Board...there is a circular to this
effect...practically however companies do not bother and continue to
appoint people as Directors who do not form part of the Board....
Jayashree

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C.JAYASHREE
PARTNER
S.GANESH&ASSOCIATES
CHENNAI
98840 17120

[Suresh Kumar Vaishraj]

Agreed, I have the circular as stated below. However, I feel that's only advisory and not mandatory. I mean to say, if I company goes ahead appointing that way it would neither violate the Companies Act, 1956 nor any Rules made thereunder. This is my view. I request members to confirm or contravene the same.

Extract of Department of Company Affairs Circular No.2/1982(1/1/82-CL-V;23/44/79-CL-II) dated 20^th January, 1993 regarding appointment of persons styled as special directors, executive directors, etc.

  Instances have come to the notice of the Department where companies have designated executives who are not members of the Board as special director, director administration, etc.  Such designations give an impression to public at large and those dealing with these companies and the executives that they are full-fledged directors entitled to act as such on behalf of the companies. If in fact these executives are not directors on the board of the companies, it will be patently wrong on the part of companies to designate them as directors.  

                The Department is therefore constrained to advise companies to desist from giving such designations to their executives which tend to mislead.

                I am directed to request you to bring this to the notice of all your constituents/members for information and compliance.  The action taken on this communication may kindly be intimated to this Department.

Extract of Department of Company Affairs Circular No.11/1990 (3/5/89-CL-V) dated 29^th May, 1990 regarding appointment of persons styled as special directors, executive  directors etc.

I am directed to refer to this Department’s Circular No.1/1/82-CL-V dated 20.1.1983 addressed to all Chambers of Commerce, and to say that many companies are still designating their executives, who are not members of the board of directors, as special directors, etc.

2.         You are, therefore, requested once again to ensure that your constituents/members do not use such designations, as such designations mislead the members of the public.

Thanks and Regards,
Suresh Kumar V
Company Secretary
91-9849991201

[renukameera91]

Dear Madam,

We can appoint Directors-operations and they will not be part of the board and these directors will carry out the vision set by the Board in implementing the same. 

With Regards,

C.Renuka

On Sat, Feb 25, 2012 at 1:14 PM, Jayashree Chandrasekaran <jayak...@gmail.com> wrote:

[HEGDE KAMALAKAR]

I agree with Jayashree madam's opinion. A Company  which follows best Corporate governance/ethics not going to designate officials as Directors which may misleading to the stakeholders.

 

CA.Kamalakar Hegde.

MD-MTK Corporate Solutions Pvt Ltd.

 

 

On Sat, Feb 25, 2012 at 1:14 PM, Jayashree Chandrasekaran <jayak...@gmail.com> wrote:

[Suresh Kumar Vaishraj]

Dear Mr. Kamalakar,

I completely agree to your stand in view of Corporate Governance. However my query is non-adherence to the given circular, would it tantamount to violation of Companies Act or any Rules. Would it warrant any compounding of offense etc? I feel no.

Dear Friend, request to give your remarks.

Thanks and Regards,
Suresh Kumar V
Company Secretary
91-9849991201

[Nihar Mohapatra]

Instead of Director, the head officals may be appointed as Joint Director, which will not affect the Corporate Governance part of a company.

[company secretary]

Dear Sir,

Can you provide the link of this circular 2/1982. from some Government site.

Regards

shobhita singh