Managing Director means a director who by virtue of an agreement with the company or of a resolution passed by the company in general meeting or by its Board of Directors or by virtue of its memorandum or articles of association is entrusted with substantial powers of management which would not otherwise be exercisable by him. It includes a director occupying the position of managing director by whatever name called. Whole time director includes a director in the whole time employment of the company. A person who does not devote substantially the whole of his time to the company is not a whole time director. A whole time director is virtually a managing director though not so designated. A director in charge is also in the same position as a managing director. It has been held that a Managing director is a part of the company’s Board of directors and not a servant of the company.
He is an agent of the company with a capacity to bind the company within the sphere of management authorized to him. He can be regarded as the principal employer.
A managing director may be appointed in any of the followings ways:
1) by agreements with the company
2) by a resolution passed by the company in general meeting
3) by a resolution passed by the board of Directors
4) by memorandum of association
5) by articles of associations
Powers of managing director or whole time director
A managing director of a company shall exercise his powers subject to the superintendence control direction of its Board of Directors. He is entrusted with substantial powers of management and administration of the affairs of the company.
The following powers to do administrative acts of a routine nature shall not be deemed to be included within substantial powers of management
1) powers to affix the common seal of the company to any document or
2) to draw and endorse any cheque on the account of the company in any bank or
3) to draw and endorse any negotiable instruments
4) to sign any certificate of share or
5) to direct registration of transfers of any share;
The managing director derives his powers from: (1) articles of the company (2) agreements with the company if any (3) resolutions passed in the annual general meetings or board of directors meetings from time to time.
The managing director of company may be entrusted with substantial power of management but not necessarily of the whole or substantially the whole of the affairs of a company. A company may, therefore have more than one managing director apart from whole time directors.
Appointment of managing director or whole time director on and from 15.06.1988 ever public company, or private company which is a subsidiary of a public company having a paid up capital of rupees five crores shall have a managing or whole time of director or a manager.
No appointment of a person as a managing or whole time director or a manager in a public company or a private company shall be made except with the approval of the Central Government unless such an appointment is made in accordance with the conditions specified in Parts I & II (subject to provisions of part III) of Schedule XIII and a return in the prescribed form is filed within ninety days from the date of such appointment.
Every application seeking approval to the appointment of managing or whole time director or a manger shall be made to the Central Government within a period of ninety days from the date of such appointment.
Source: Business Law