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Appointment of Joint or Deputy Managing Director: Resolutions

The Companies Act, 2013 is silent about the provisions regarding appointment of Joint / Deputy Managing Director in a company whether public or private limited.

However, usually in the large scale companies, Joint / Deputy Directors are appointed as a position next to the Managing Director.

Though there is no specific provision in the Act or rules made thereunder, there is no prohibition either for such appointments.


It is pertinent to mention that a joint director acts as a whole-time director and not as a non-executive director.

FORMAT OF RESOLUTIONS

Board Resolution

#. Appointment of .......................... as a Joint / Deputy Managing Director

“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 the approval of the central government, if any, 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./Ms. .................. as a 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 Nomination and Remuneration Committee in its meeting.”

Nomination and Remuneration Committee Resolution

#. Appointment and remuneration of .........................., Joint / Deputy Managing Director

“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 and other authorities, 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./Ms. ..................... 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. .............. (Rupees .............................) 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 the policies 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 policies 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 ............ (Rupees .................).

(e) CONTRIBUTION TO PROVIDENT FUND AND SUPERANNUATION FUND
Contribution to Provident Fund and Superannuation Fund, as per policies of the company, to the extent these, either singly or put together, are not taxable under the applicable Income-tax Act.

(f) LEAVE AND ENCASHMENT OF LEAVE
As per policies of the company.

(g) GRATUITY AND / OR CONTRIBUTION TO GRATUITY FUND
As per policies of the company.

(h) USE OF CAR AND TELEPHONE
A 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 policies 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 (Name of the Director/Officer), (Designation) be and is hereby authorised to do all such acts, deeds, matters and things as may be deemed necessary to give effect to foregoing resolution.


General Meeting Resolution

To consider and if thought fit, to pass the following resolution as an Ordinary Resolution:

#. Appointment of ............................... 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 other approval(s) as may be necessary and subject to such conditions as may be imposed by any authority while granting such approval(s) and as are agreed to by the board of directors (hereinafter referred to as "the Board", which term shall include any committee thereof and any person authorised by the Board), consent of the members be and is hereby accorded to the appointment of Mr. .................... as a 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. .............. (Rupees .............................) 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 the policies 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 policies 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 ............ (Rupees .................).

(e) CONTRIBUTION TO PROVIDENT FUND AND SUPERANNUATION FUND
Contribution to Provident Fund and Superannuation Fund, as per policies of the company, to the extent these, either singly or put together, are not taxable under the applicable Income-tax Act.

(f) LEAVE AND ENCASHMENT OF LEAVE
As per policies of the company.

(g) GRATUITY AND / OR CONTRIBUTION TO GRATUITY FUND
As per policies of the company.

(h) USE OF CAR AND TELEPHONE
A 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 policies 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 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 and Mr. .................... subject to the limits within such guidelines or amendments as may be made to the Companies Act, 2013 or subject to the 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 foregoing resolutions.”



EXPLANATORY STATEMENT
PURSUANT TO SECTION 102 OF THE COMPANIES ACT, 2013

Mr. .................... was at first inducted to the Board as an Additional Director in the meeting of the board of directors held on (Date).

(Mention his qualification and work experience details here.)

(Mention his role and work responsibilities in the company.)

The Board in its meeting held on (Date), considered and decided to entrust Mr. .................... with additional role and responsibility by elevating him as a Joint / Deputy Managing Director of the company.

The tenure of his appointment as Joint / Deputy Managing Director will be for a period of three years with effect from (Date).

Mr. ....................’s appointment as a 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 terms of his remuneration was approved by the Nomination and Remuneration Committee in its meeting on (Date).

The remuneration is within the overall limit prescribed under Schedule V to the Companies Act, 2013.

The Board may at its liberty 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 and as per the approval of the shareholders sought herein.

The consent of the members is required for appointment of  Mr. ....................   as Joint / Deputy Managing Director of the company. The Board recommends the resolution as set out in item no. .... for approval of the members as an ordinary resolution.

A copy of the board resolution, the appointment letter issued to and a contract of service with 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 registered office of the company.

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

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