Question

Define Managing Director. Write about the qualification, appointment, remuneration of Managing Director.

Answer 1

A Managing Director as defined by the companies act means a director who by virtue of agreement with the company or of a resolution passed by a the company is entrusted with substantial powers of management which would not be otherwise be exercisable by him and includes a director occupying the position of a managing director. A managing director must be an individual and can be appointed for a maximum term of five years at a time.

The companies act does not prescribe any qualification for directors of the company. An Indian company may therefore in its articles stipulate qualifications for directors. The Companies Act does however limit the specified qualification of directors which can be prescribed by a public company or private company that is not subsidiary of a public company to be five thousand rupees.

Remuneration: In case of a public company or a private company , the remuneration is subject to the provisions of the Company Act and may be determined either by the article or if the article so provide , by a special resolution of the company in general meeting.