Short form : Key managerial personnel are mostly referred to as "KMP" in short.
Provisions under the Companies Act 2013 ("the Act")
Definition of Key managerial personnel
Section 2(51) of the Act defines Key managerial personnel as follows:
“Key managerial personnel”, in relation to a company, means—
- the Chief Executive Officer or the managing director or the manager;
- the company secretary;
- the whole-time director;
- the Chief Financial Officer; and
- such other officer as may be prescribed;
- Chief Executive Officer (CEO) - Section 2(18)
- Managing Director (MD) - Section 2(54)
- Manager - Section 2(53)
- Company Secretary (CS) - Section 2(24)
- Whole-time Director (WTD) - Section 2(94)
- Chief Financial Officer (CFO - Section 2(19)
Classes of companies required to appoint Key managerial personnel
- Every listed company and
- every other public company having a paid-up share capital of Rs. 10 crore or more.
Passing of a board resolution containing terms and conditions of appointment and remuneration details of a whole-time KMP is mandatory.
Whole-time key managerial personnel not to hold office in more than one company [Sec. 203(3)]
A whole-time key managerial personnel shall not hold office in more than one company except in its subsidiary company at the same time.
With the permission of the Board of a company, a key managerial personnel can act as a director of any other company.
Appointment of managing director in more than one company
A company may appoint or employ a person as its managing director, if he is the managing director or manager of one, and of not more than one, other company, by fulfilling the following conditions:
- such appointment or employment is made or approved by a resolution passed at a meeting of the Board with the consent of all the directors present at the meeting
- specific notice has been given to all the directors then in India, for conducting of the said meeting and and for passing of the above resolution to be moved thereat.
(a) the articles of such a company provide otherwise; or
(b) the company does not carry multiple businesses:
- company punishable with fine which shall not be less than Rs. 1 lakh but which may extend to Rs. 5 lakh; and
- every director and key managerial personnel of the company who is in default shall be punishable with fine which may extend to Rs. 50,000 and
- where the contravention is a continuing one, with a further fine which may extend to Rs. 1000 for every day after the first during which the contravention continues.
Provisions under the Companies Act 1956
The Companies Act 1956 did not define the term "Key Managerial Personnel (KMP)". Definition of 'Key Managerial Personnel' of a Company was generally referred as per the definition given under the Accounting Standard 18 i.e. "the persons who have the authority and responsibility for planning, directing and controlling the activities of the reporting enterprise".