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Appointment of Joint / Deputy Managing Director

The Companies Act, 2013 is silent about the provisions regarding appointment of Joint / Deputy Managing Director in a Company whether Public or Private. However usually in large/medium scale Companies, Joint / Deputy Directors are appointed as a position next to Managing Director. Though there is no specific provision exists in any act/rule/regulation for the appointment, there is also no prohibition in this regard.

It is pertinent to mention that a Joint Director has to be a Whole-time Director of the Company.


The following resolutions need to be passed at the meeting of Board of the Directors, committee thereof and members:-


ITEM NO. __: APPOINTMENT OF MR. __________ AS JOINT MANAGING DIRECTOR


A. Board Resolution for appointment:


“RESOLVED THAT pursuant to provisions of Sections 197, 198 and 203 read with Schedule V and other applicable provisions, if any, of the Companies Act 2013, as amended from time to time, subject to approval of the members in the General Meeting and subject to approval of the Central Government and such other consents and permission as may be necessary, and subject to such modifications, variations as may be approved and acceptable to the appointee, the consent of the board of Directors be and is hereby accorded for the appointment of Mr.______________ as Joint / Deputy Managing Director of the Company for a period of three years from ___(date)___ to ___(date)___ and payment of remuneration for the aforesaid period on the terms and conditions as approved by the Remuneration Committee in its meeting.”
B. Remuneration Committee Resolution for fixing remuneration terms:

“RESOLVED THAT pursuant to provisions of Sections 197, 198 and 203 read with Schedule V and other applicable provisions, if any, of the Companies Act 2013, as amended from time to time, and subject to the approval of Shareholders in the General Meeting of the Company and subject to the approval of Central Government as may be required, the remuneration payable (including the remuneration to be paid in the event of loss or inadequacy of profits in any financial year) to Mr._____________ whose name is proposed for the office of the Joint / Deputy Managing Director be and is hereby approved for a period of  3 years with effect from ___(date)___.


I. REMUNERATION


(a) SALARY

Rs. 1,10,000 (Rupees one lakh ten thousand only) per month, including Dearness Allowance and other Allowances.


(b) INCENTIVE / COMMISSION

Equivalent to 1% of the net profits of the Company, subject to a ceiling of an amount equal to annual salary.


II. PERQUISITES


(a) HOUSING

The Company shall provide free un-furnished accommodation. The value of benefit will be determined as per the Income Tax Rules.


(b) REIMBURSEMENT OF MEDICAL EXPENSES

Reimbursement of medical expenses (including insurance premium for medical and hospitalisation policy, if any) incurred for self and family, subject to a ceiling of one month’s salary or three months’ salary over a period of three years, as per Rules of the Company. For the above purpose, “Family” includes spouse, dependent children and parents.


(c) LEAVE TRAVEL CONCESSION

Leave Travel Concession for self and family, once a year, incurred in accordance with the Rules of the Company. For the above purpose, “Family” includes spouse, dependent children and parents.


(d) PERSONAL ACCIDENT INSURANCE

Personal accident insurance cover of an amount, the annual premium of which does not exceed Rs 5000.


(e) CONTRIBUTION TO PROVIDENT FUND AND SUPERANNUATION FUND

Contribution to Provident Fund and Superannuation Fund, as per Rules of the Company, to the extent these, either singly or put together, are not taxable under the Income Tax Act, 1961.


(f) LEAVE AND ENCASHMENT OF LEAVE

As per Rules of the Company.


(g) GRATUITY AND / OR CONTRIBUTION TO GRATUITY FUND

As per Rules of the Company.


(h) USE OF CAR AND TELEPHONE

Company maintained car with driver for use on Company’s business, telephone at residence and cellular phone provided by the Company will not be considered as perquisite. However, personal long distance calls and use of car for private purposes shall be borne by the Director.


(i) REIMBURSEMENT OF EXPENSES

Reimbursement of entertainment, travelling and all other expenses incurred for the business of the Company, as per Rules of the Company.


III. REMUNERATION IN THE EVENT OF LOSS OR INADEQUACY OF PROFITS


Where in any financial year, the Company has no profits or its profits are inadequate, the foregoing amount of remuneration and benefits shall be paid, subject to Incentive / Commission being restricted to 50% of annual salary and applicable provisions of Schedule V to the Companies Act, 2013.


NOTES :

(a) Net profits for this purpose shall be as per computation of Net Profits under Sections 198 of the Companies Act, 2013.

(b) The remuneration package is well within the overall limit prescribed under Schedule V to the Companies Act, 2013, which permits the Company to provide for an overall remuneration, not exceeding 10% of the Net Profits in any year, to all its Directors.


RESOLVED FURTHER THAT the Board of Directors of the Company/Committee of the Board be and is hereby authorized to alter, amend or vary the terms and conditions of appointment including remuneration structure as may be agreed to between the Board of Directors and Mr. _________ subject to the limits within such guidelines or amendments as may be made to the Companies Act, 2013 or subject to approval of the Central Government or such other authority.


RESOLVED FURTHER THAT the Board be and is hereby authorised to do all such acts, deeds, matters and things as may be deemed necessary to give effect to above resolution.”


C. General Meeting Resolution for appointment:


To consider and if thought fit, to pass the following resolution as an ORDINARY RESOLUTION:


APPOINTMENT OF MR. __________ AS JOINT MANAGING DIRECTOR


“RESOLVED THAT pursuant to the provisions of Sections 197, 198 and 203 read with Schedule V and other applicable provisions, if any, of the Companies Act 2013 including any statutory modification or re-enactment thereof, or any other law and subject to such consent(s), approval(s) and permission(s) as may be necessary in this regard and subject to such conditions as may be imposed by any authority while granting such consent(s), permission(s) and approval(s) and as are agreed to by the Board of Directors (hereinafter referred to as the Board, which term shall unless repugnant to the context or meaning thereof, be deemed to include any committee thereof and any person authorised by the Board in this behalf), consent of the members be and is hereby accorded to the appointment of Mr. ___________ as Joint / Deputy Managing Director of the Company for a period of three years with effect from   ___(date)___ , on the terms and conditions set out below:





I. REMUNERATION


(a) SALARY

Rs. 1,10,000 (Rupees one lakh ten thousand only) per month, including Dearness Allowance and other Allowances.


(b) INCENTIVE / COMMISSION

Equivalent to 1% of the net profits of the Company, subject to a ceiling of an amount equal to annual salary.


II. PERQUISITES


(a) HOUSING

The Company shall provide free un-furnished accommodation. The value of benefit will be determined as per the Income Tax Rules.


(b) REIMBURSEMENT OF MEDICAL EXPENSES

Reimbursement of medical expenses (including insurance premium for medical and hospitalisation policy, if any) incurred for self and family, subject to a ceiling of one month’s salary or three months’ salary over a period of three years, as per Rules of the Company. For the above purpose, “Family” includes spouse, dependent children and parents.


(c) LEAVE TRAVEL CONCESSION

Leave Travel Concession for self and family, once a year, incurred in accordance with the Rules of the Company. For the above purpose, “Family” includes spouse, dependent children and parents.


(d) PERSONAL ACCIDENT INSURANCE

Personal accident insurance cover of an amount, the annual premium of which does not exceed Rs 5000.


(e) CONTRIBUTION TO PROVIDENT FUND AND SUPERANNUATION FUND

Contribution to Provident Fund and Superannuation Fund, as per Rules of the Company, to the extent these, either singly or put together, are not taxable under the Income Tax Act, 1961.


(f) LEAVE AND ENCASHMENT OF LEAVE

As per Rules of the Company.


(g) GRATUITY AND / OR CONTRIBUTION TO GRATUITY FUND

As per Rules of the Company.


(h) USE OF CAR AND TELEPHONE

Company maintained car with driver for use on Company’s business, telephone at residence and cellular phone provided by the Company will not be considered as perquisite. However, personal long distance calls and use of car for private purposes shall be borne by the Director.


(i) REIMBURSEMENT OF EXPENSES

Reimbursement of entertainment, travelling and all other expenses incurred for the business of the Company, as per Rules of the Company.


III. REMUNERATION IN THE EVENT OF LOSS OR INADEQUACY OF PROFITS


Where in any financial year, the Company has no profits or its profits are inadequate, the foregoing amount of remuneration and benefits shall be paid, subject to Incentive / Commission being restricted to 50% of annual salary and applicable provisions of Schedule V to the Companies Act, 2013.


NOTES :

(a) Net profits for this purpose shall be as per computation of Net Profits under Sections 198 of the Companies Act, 2013.

(b) The remuneration package is well within the overall limit prescribed under Schedule V to the Companies Act, 2013, which permits the Company to provide for an overall remuneration, not exceeding 10% of the Net Profits in any year, to all its Directors.


EXPLANATORY STATEMENT-

PURSUANT TO SECTION 102 OF THE COMPANIES ACT, 2013

Mr. __________ was first inducted to the Board at the Board Meeting held on ___(date)___. He was appointed as Director (_____) and the tenure of his appointment was from ___(date)___ to ___(date)___. The said appointment and remuneration package, as determined by the Remuneration Committee of the Board and the Board of Directors, were later approved by the Members of the Company at the ______th Annual General Meeting held on ___(date)___.



He has completed his term as Director (_________) on ___(date)___. Mr._________ is a _____________ (qualification) and _____ from ______ University. Mr.__________ has to his credit nearly 33 years of industrial experience, majority of which has been spent in _________ companies. He is largely responsible for the efficient operations of the ______ and its excellent financial performance. The Company is currently implementing a major project at ________. At this crucial juncture, the continued services of Mr. ________________ are considered essential for successful completion of the Project and achieve smooth operations thereafter. It is also essential for the Company to have his continued services for its future growth. The Board of Directors, at their Meeting held on _____________, considered and decided to entrust Mr. ____________ with increased role and responsibility by elevating him as Joint / Deputy Managing Director of the Company. The term of his appointment as Joint / Deputy Managing Director will be for a period of three years from ___(date)___ to ___(date)___.


The remuneration package for Mr. ___________, as determined by the Remuneration Committee of the Board and approved by the Board of Directors at the Board Meeting held on ____________, is forming part of the Resolution under Item __ of the Agenda for this Meeting. Mr. _______’s appointment as Director on the Board of the Company was on the basis of his being liable to retire by rotation. He will continue to be the Director of the Company till his turn comes for retirement by rotation. He is eligible to seek re-election at the Annual General Meeting in which he retires by rotation.


The remuneration package is well within the overall limit prescribed under Schedule V to the Companies Act, 2013, which permits our Company to provide for a salary not exceeding 10% of the Net Profits in any year to all its Directors. The Board of Directors will also be at liberty to alter, vary and revise the remuneration, including commission and the perquisites, from time to time, within the limits prescribed in Schedule V to the Companies Act, 2013 or any amendment or statutory modifications thereto.


In terms of the provisions of the Companies Act, 2013, consent of the shareholders is required for appointment of  Mr. _____   as Joint / Deputy Managing Director of the Company. The Board recommend the resolution as set out in item no. 1 for approval of the members as an ordinary resolution. A copy of the Board Resolution and the appointment letter issued to  Mr. _____  , Joint / Deputy Managing Director will be available for inspection between 11.00 A.M. to 01.00 P.M. on all working days (Monday to Friday) at the Corporate Office of the Company.


The terms as set out in the resolution and explanatory statement may be treated may be treated as an abstract of the terms and conditions governing the appointment and remuneration and memorandum of interest pursuant to Section 190 of the Companies Act, 2013.


None of the directors of the Company except Mr. _____  , is concerned or interested in the proposed resolution.

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