Can MD be appointed as CFO at the same time ?

[CS Alpesh Dhandhlya]

Dear Experts,

Can the MD of the XYZ Company be appointed as CFO of the same Company ?

As per the reading of section 203 of the CA,2013, it is not restricting the same. 

If not, can you just help me with the section of the CA, 2013...

[Vivek Hegde]

Dear Mr. Alpesh,

Though there is not restriction directly, section 203 mandates appointment of MD and CFO as two separate positions. If the company fall under the class of companies required to have KMP, then MD can not be CFO.

203. (1) Every company belonging to such class or classes of companies as may be

prescribed shall have the following whole-time key managerial personnel,—

(i) managing director, or Chief Executive Officer or manager and in their absence,

a whole-time director; 

(ii) company secretary; and

(iii) Chief Financial Officer :

Warm Regards

CS Vivek Hegde,B.com, FCS, CWA

Vivek Hegde & Co.
Company Secretaries
No. 2034, 26th Cross, K.R.Road
Banashankari II Stage, Behind 

Sevakshetra Hospital

Bangalore-560070
Mob : 09900898223

Off: 080 26710667

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[mallik vishwanatham]

It is a matter of debate until MCA gives clarity as there is no provision in CA13 that same person cannot be appointed for all the KMP positions.

Under CA56, in case of Companies which attracted provisions of 269 and 383A, I have seen so many companies including listed companies appointing the same person as WTD and CS. It was an accepted practice then.

Thanks & Regards

Mallik

[BINDU MADHAVA]

In section 203(1) the word "following" is used.

Both positions are independent

regards
Bindu Madhava K G

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[CS Alpesh Dhandhlya]

Thanking you so much for your valuable suggestion..

However, ours is the listed company which is already following under the ambit of 203 and the MD has approached  to appoint himself as CFO.

Now, in absence of any provisions the it is not practicable to convince him to refrain from doing so.

Hence, will there be any penal provisions if appoint MD as CFO ?

[csyogan .]

icsi in its faq.s has clarified that an individual cannot take both the positions at a time as the term 'whole time' has been used in s.203

regards,
yogan.

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[Himanshi Baluni]

Dear Yogan ji

,

Can you pls share the said FAQs by ICSI where it is written that MD cannot be appointed as CFO. I am facing the same issue.

Thanks & Regards

Himanshi Baluni

[Venkata subba rao]

Hi

 

The CEO & MD can be the same but not the MD and CFO.CFO and CS are independent.

 

Regards

 

p.v.s.rao

CS,CMA,MBA,M.COM

[CS Alpesh Dhandhlya]

Dear Rao Ji,

You are right that MD and CFO can not be the same  person.

However, can you please share the section or Rule of the Act to convince the present MD of our Company ? 

[Venkata subba rao]

hi

 

kindly refer section 203 :section 2(51)

 

regards

p.v.s.rao

On Sunday, December 14, 2014 8:46:01 PM UTC+5:30, CS Alpesh Dhandhlya wrote:

[Himanshi Baluni]

​

Hi,

Pls see point no. 117 of FAQs provided by ICSI. It has been well clarified. The same has been attached for reference 

Thanks & Regards

Himanshi Baluni

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[mallik vishwanatham]

I don't agree with the ICSI FAQ clarification.

A person holding two positions is also called Whole Time only.

Section 383A of CA56 also requires whole time CS. Then how come so many companies including listed companies appointed their CS as their WTD as well for the purpose of Section 269.

The Section 203 itself allows to hold two positions as Chairman & MD and Chairman & CEO. Further, it says a KMP can also be a KMP of its subsidiary.

Means in the above cases whether they are not whole time positions.

Thanks & Regards

Mallik

On Sunday, December 14, 2014 8:46:01 PM UTC+5:30, CS Alpesh Dhandhlya wrote:

[csyogan .]

icsi has given faq.s on its portal

even if it has a disclaimer the regulator considers it as validated by icsi

they might be treated at par with a clarification given by icai

as everyone of us is aware icai clarification has good weightage

icsi should have either given a clarification or should have abstained itself from releasing faq.s

regards,
yogan

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