Draft rules - Executive director - CRITICAL ANALYSIS

[CS A Rengarajan]

Dear all

PLEASE NOTE THAT THIS IS MY PERSONAL VIEW AND CONTRARY VIEW ON THIS SUBJECT ARE WELCOME. WHATEVER I UNDERSTOOD, I HAVE WRITTEN HERE.

In the Draft rules  the Executive director  has defined as Executive Director means a whole time director as defined in section 2(94) of the Act. 

Section 2 (94)  (94) “whole-time director” includes a director in the whole-time employment of the company

Section 2(94)  provides director in the whole time director and Executive director also  coming under purview of  the  whole time employment   Here  the companies are bound to appoint them  as  board members as per draft rules  or else change the designation and not mention director post.  If they are appointing as board members then they have to file necessary forms with MCA ( Din, appointment of dfirector, wholetime director etc)    

 Many companies in India are giving designation to top management as Executive Director and they are not board members.  In this connection, the department has given necessary circular desisting the companies to give such designation.

The idea is that  they are not board members but for outsdie world, they are board members.  Now  the issue has been settled after necessary incorporation in  draft rules.

Conclusion:  Long pending clarification persons designated as Executive Director not as a board member has been clarified by these rule. Now it is mandatory to include them in Board composition.

I am also forwarding necessary DCA circular for your ready reference.

Regards

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 fullfledged 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. 

Source: Issued by the Department of Company Affairs, vide their F. No. 1/1/82-CL-V; 23/44/79-CL-II, dated 20 January 1983; Circular No. 2/82.

Regards, 

--

 

CS A Rengarajan

9381011200

CS Benevolent Fund is a collective effort towards extending the much needed financial support to the community of Company Secretaries in times of distress  Let us lend support and join for noble cause.

SHARING KNOWLEDGE SKY IS THE LIMIT

This mail and its attachments (if any) are confidential information intended for persons to whom the email is planned for delivery by the sender. If you have received this mail in error please notify the sender of the error by forwarding the email and its attachments (if any) and then deleting the mail received in error and the relevant email trail in this connection without making any copies or taking any prints.

[Usha Ganapathy Subramanian]

Dear Sir,

This is one of the debates put to rest now. Many companies give such designations to persons and people are left to wonder whether they are dealing with board members or not. Either those persons have to be inducted into the board or be given different designations.

Thanks & Regards,

G Usha

--
--
************************************************
Mail your comments, feedback and suggestions on CSMysore to Moderator: datta...@gmail.com and Manager: vivekhe...@gmail.com
 
Find eNewsletters of ICSI Mysore at: www.icsi.edu/NewsEvents/enewsletters/tabid/1757/Default.aspx
 
---
You received this message because you are subscribed to the Google Groups "CSMysore" group.
To unsubscribe from this group and stop receiving emails from it, send an email to csmysore+u...@googlegroups.com.
For more options, visit https://groups.google.com/groups/opt_out.