Responsibilities of CEO and Managing Director
The complete management and operation of the firm belong to the combined responsibilities of the Managing Director and the Chief Executive Officer. With significant control over every aspect of business operations, the managing director will play a vital role in guiding the firm toward expansion and innovation. The Companies Act outlines the Managing Director appointment procedure and offers flexibility in distinct ways, which are as follows:
- By the Articles of Association: The Articles of Association of the firm have the authority to specify the terms of the nomination of a Managing Director, including the duties and authority assigned to this significant position.
- A legal agreement with the enterprise: A written agreement stating the terms and circumstances of the employment between the individual and the firm may be used when selecting a managing director.
- Resolution Approved at a General Meeting: A resolution accepted at a general meeting offers a different approach to electing a managing director and reflects the stakeholders’ joint decision-making process.
- By the firm’s board of directors: The board of directors emphasizes their important role in forming the company’s leadership structure by having the power to directly designate a managing director.
According to the Act, a manager has been charged with supervising and handling all aspects of the firm while being directed, controlled, and under the board of directors’ supervision. This concept will include directors and those who have management positions, even as part of a service agreement. It’s vital to note that the Act prohibits the appointment of a managing director and a manager at the same time, guaranteeing distinct responsibilities within the firm’s hierarchy.
Key Managerial Personnel: Responsibilities, Appointments, Roles and Responsibilties
The Companies Act, 2013 defines Key Managerial Personnel (KMP) as those individuals who manage the operations of a business. These individuals are responsible for making pivotal business decisions and ensuring legal compliance. KMP will be accountable if they fail to adhere to this Act. Their responsibilities involve steering, managing, and overseeing the firm’s operations. For certain business classes, such as listed corporations and public firms with paid-up share capital of at least 10 crore rupees, the Act demands the nomination of KMP. KMP appointments are mandatory for private firms that meet the same capital requirement. However, they are optional for firms with less share capital.
Geeky Takeaways:
- Definition: The Companies Act 2013 defines KMP as individuals who manage a business’s operations.
- Responsibilities: KMP will make pivotal business decisions and ensure legal compliance. They will steer, manage, and oversee the firm’s operations.
- KMP Appointment for Private Firms: It is mandatory for private firms meeting the ₹10 crore+ capital requirement to appoint KMP.
- KMP Appointment for Other Organizations: For organizations with less share capital, KMP appointments are optional.
Table of Content
- Key Managerial Personnel under Companies Act, 2013
- Responsibilities of CEO and Managing Director
- Appointment of Key Managerial Personnel
- Roles and Responsibilities of KMP
- Conclusion
- Frequently Asked Questions (FAQs)