• Full-time company secretary as Executive Director of another company

We had a company having paid up capital more than 5 crores and we appointed one company secretary as full time company secretary to comply provisions of the companies Act. As of now we opened another new company ( Not Subsidiary or holding company) which is having common directors . Our board looking for some resident director to be appointed to comply provision of companies act with respect to resident director . Can this company director can be appointed as resident director of that new company and as well as can he be also given responsibility as an authorized signatory to apply for all local registrations as applicable . We want to comply with provisions of companies act and Company secretarial rules as prescribed by ICSI . Please give us opinion in writing quoting sections and provisions of applicable laws and regulations .
Asked 7 years ago in Business Law

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16 Answers

Dear Client,

A person is allowed to be the Director of a maximum of 20 Companies simultaneously as per the Companies act, 2013 but make sure companies not having rivalry business.

Yogendra Singh Rajawat
Advocate, Jaipur
23079 Answers
31 Consultations

A person can be director in one company and employee in other company. There is no provision in Companies Act, 2013 that prohibits the same.

Mohammed Mujeeb
Advocate, Hyderabad
19325 Answers
32 Consultations

A person can be director in one company and employee in other company. There is no provision in Companies Act, 2013 that prohibits the same.

 

2) The Council of the Institute at its 156th Meeting held on March 19-20, 2005, in exercise of its powers under regulation 168 of the Company Secretaries Regulations, 1982 has accorded general permission to its members in practice to become non-executive director/promoter/promoter director/subscriber to the Memorandum and Articles of Association of a company the objects of which include areas, which fall within the scope of the profession of Company Secretaries irrespective of whether or not the practising member holds substantial interest in that company. 

 

3) The Council has further allowed members in practice to become non-executive director/promoter/promoter director/subscriber to the Memorandum and Articles of Association of a company which is engaged in any other business or occupation provided that the practising member does not hold substantial interest in the company

 

4) CS can be non executive director and not executive director

 

5) A non-executive director means an ordinary director who fulfils the following conditions:

  1. he is required to attend the meetings of the Board or its committees only.
  2. he is not paid any remuneration except the sitting fees for attending the Board/Committee meetings and any remuneration to which he is entitled as ordinary director.
  3. he is devoting his time for the company only to attend meetings of the Board or Committees thereof and not for any other purpose.

Ajay Sethi
Advocate, Mumbai
99775 Answers
8145 Consultations

A person can be director even if he is employed in other company.

Shubham Jhajharia
Advocate, Ahmedabad
25513 Answers
179 Consultations

company secretary cannot be executive director of another company 

Ajay Sethi
Advocate, Mumbai
99775 Answers
8145 Consultations

A person can be director in one company and employee in other company. There is no provision in Companies Act, 2013 that prohibits the same.

Yogendra Singh Rajawat
Advocate, Jaipur
23079 Answers
31 Consultations

Yes he can be appointed 

Anilesh Tewari
Advocate, New Delhi
18103 Answers
377 Consultations

In order to take a written legal opinion on a letter head of an advocate, get in touch with some advocate, who may provide you the same. 

Regards 

Anilesh Tewari
Advocate, New Delhi
18103 Answers
377 Consultations

An individual can not be appointed as the Whole Time Director in two companies. As per the explanation under section 269 of the Act, a whole-time director includes a director in the whole-time employment of the company. In other words, a director who devotes his whole time to the affairs of a company is called a whole-time director of the company. A whole-time director of a company cannot accept the position of a whole-time director in other companies, though he may accept office of non-whole-time director in other companies subject to the limits imposed by section 275 read with sections 277 and 278.
However, there is no specific provision in the companies act which prohibits a person to act as whole time director of more than two companies. Section 269 is just an explanation of Whole Time Director. You can also see in the real world, in many group companies the same person is Whole Time Director of more than one company.

However the above provisions applies for whole time director of the company and not for other directors who can be appointed as director of another company simultaneously.

 

T Kalaiselvan
Advocate, Vellore
89977 Answers
2492 Consultations

 A person can be director in one company and employee in other company. There is no provision in Companies Act, 2013 that prohibits the same. There are many people who are in employment elsewhere and become director in their own company. Thus a company secretary can be appointed as an executive director of other company.

T Kalaiselvan
Advocate, Vellore
89977 Answers
2492 Consultations

non-executive director (NED) typically does not engage in the day-to-day management of the organization, but is involved in policy making and planning exercise

 

2) he should not perform executive functions of signing applications , filing of returns, signing of cheque’s  etc

 

3) he should only attend meeting of board of directors or committees 

Ajay Sethi
Advocate, Mumbai
99775 Answers
8145 Consultations

Although there is no legal distinction between the powers and duties of executive directors and non-executive directors, the two play different roles on a board of directors. Even u/s 166 of Companies Act, 2013 duties of directors are prescribed which are equal for both executive and non-executive Director.

To became executive Director ‘a person should be Director’ of the Company.

To became executive Director ‘a person should be Whole Time Employee’ of the Company.

To became executive Director ultimately ‘a person should be Whole Time Director’ of the Company.

Managing Director: As per Clause 2(54) of Companies Act, 2013 “managing director” means a director who, by virtue of the articles of a company or an agreement with the company or a resolution passed in its general meeting, or by its Board of Directors, is entrusted with substantial powers of management of the affairs of the company and includes a director occupying the position of managing director.

As per Section 203 a person can be Managing Director in more than one Company with the approval of the Board of Director of First Company. Therefore, this is exception situation in which a person can be executive director in more than one Company.

As per the provisions of Companies Act, 2013:

A person who is already in full time employment in a Company then he is not eligible to appoint as full time Director in another company except in their subsidiary company.

T Kalaiselvan
Advocate, Vellore
89977 Answers
2492 Consultations

The executive and non-executive director have same role and function he can be entrusted with these responsibilities by board.

Shubham Jhajharia
Advocate, Ahmedabad
25513 Answers
179 Consultations

Yes this can be done 

Anilesh Tewari
Advocate, New Delhi
18103 Answers
377 Consultations

Resident Director: As per Section 149 sub section 3 of Companies Act 2013, Board of Directors of a company, must have at least one resident director i.e. (A person who has lived at least 182 days in India in the previous calendar year) As per General Circular No. 25/2014 The residence requirement would be reckoned from the date of commencement of section 149 of the Act i.e. 1st April, 2014, The first previous calendar year, for compliance with these provisions would, therefore, be Calendar year 2014. The period to be taken into account for compliance with these provisions will be the remaining period of calendar year 2014 i.e. 1st April to 31st December). Therefore, on a proportionate basis, the number of days for which the director(s) would need to be resident in India. During Calendar year.2014, shall exceed 136 days. Regarding Newly Incorporated Companies it is clarified that companies incorporated between 01.04.2014 to 30.09.2014 should have a resident director either at the time of incorporation OR within six months of their incorporation. Companies incorporated after 30.9.2014 need to have the resident director from the date of incorporation itself. If your director complies the aforesaid then he can be the resident director

Prashant Nayak
Advocate, Mumbai
34514 Answers
249 Consultations

A non-executive director typically does not engage in the day-to-day management of the organization, but is involved in policy making and planning exercises. In addition, non-executive directors' responsibilities include the monitoring of the executive directors and acting in the interest of the company stakeholders.

Above all not permitted to executive director.

Yogendra Singh Rajawat
Advocate, Jaipur
23079 Answers
31 Consultations

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