Is Managing Director an Employee

[Astarag]

Dear all

 

please give your views

Whether Managing director is an employee of the company under the companies Act ?

 

Under Income tax act MD remuneration is treated under Head Salary for tax calculation like other employees

 

whether the same should apply under Companies act also ?

 

please refer to case laws if any.

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With 

Cs. P.A. Patnaik

[INDRANI SANKA]

the MD is an employee of the company.

Regards,
Indrani

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Thanks,

Indrani

[kameswara Rao Kappagantula]

Yes MD is an Employee

other act is not criteria

THe definition in the act Section 2(24) is clear...

As a Director u casnnot be eligible for remuneration unless Board decides otherwise.

so MD is an employee of the Company even though he allowed to take one more employment as MD in any other Company (celing is 2)

Kamesh

[Astarag]

please give the basis or reference to clarify

[BINDU MADHAVA]

However. Managing Director is not an employee as per Section 217(2A).

Please refer mail from Mr. Omkar dated Msy 20. 2011. Copy of the MCA clsrificstion attached

[kameswara Rao Kappagantula]

Yes

Here we should demarcate a line

In case MD shareholders Approval is required and we filed forms with ROC.

While in case of other employees theere is no form filings with ROC

THe particulars of 217(2A) is for this. However some companies even showing their MD names in the particulars of employees schedule.

But he is not employee for this Section does not make him an aemployee for the Company.

Kamesh

[Achuthan Raghav]

Dear  Friends,
PLease refer the definition under Sec 2(26), of the act :

It very clearly says that, the MD is a director with substantial powers. Hence, my humble view is that, just like a director, a Managing Director may be an employee or otherwise. There is no stead and fast rule. If he has contract of service or employment like other employees and draws remuneration, then he is. But if he has no such contract or is a mere consultant, then he is not. Its all to be decided on a case-to-case basis.

The defn is given below:

"managing director" means a director who, by virtue of an agreement with the company or of a resolution passed by the company in general meeting or by its Board of directors or, by virtue of its memorandum or articles of association, is entrusted with ¹⁷[substantial powers of management] which would not otherwise be exercisable by him, and includes a director occupying the position of a managing director, by whatever name called:

Contrary views solicited.

Thanks and Regards,
Achuthan.R

I'm sure that someday children in schools will study the history of the men who made war as you study an absurdity. They'll be shocked, just as today we're shocked with cannibalism. -Golda Meir, Israeli Prime Minister (1898-1978)

 

I hope this happens in dreams atleast... Achuthan...

[Krishnamachari Degaleeswaran]

Hi..

In my view and also as mentioned in Ramaiya Book for Sec.217 MD is not an Employee of the Company under Companies Act, 1956.
Regdards,

K Degaleeswaran

 

On Tue, Oct 18, 2011 at 1:06 PM, Astarag <papa...@gmail.com> wrote: