Appointment of Managing Director: Board & Ordinary Resolution

Following formats of resolutions are for the appointment of managing director in a company. Do refer the relevant provisions applicable on your company before finalising the resolutions.

Draft Board Resolution

#. Appointment of Mr. ............................. as the Managing Director

“RESOLVED THAT pursuant to the provisions of sections 196, 197 and 203 read with Schedule V and other applicable provisions, if any, of the Companies Act 2013, including any statutory modifications or re-enactment(s) thereof for the time being in force, subject to approval of the members in the general meeting and subject to approval of the Central Government, if required, 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 Managing Director of the company for a period of five years from ...(Date)... to ...(Date)..., whose office shall not be liable to determination by retirement of directors by rotation and the payment of remuneration on the terms and conditions as approved by the Nomination and Remuneration Committee in its meeting.”


Nomination and Remuneration Committee Resolution Format

#. Appointment of Mr. ............................. as the Managing Director and Terms of Remuneration

“RESOLVED THAT pursuant to the provisions of sections 196, 197 and 203 read with Schedule V and other applicable provisions, if any, of the Companies Act, 2013 and subject to the approval of the members in the general meeting of the company and subject to the approval of the Central Government as may be required, the remuneration payable to Mr. ............................ whose name is proposed for the office of the Managing Director be and is hereby approved for a period of  five years with effect from ...(Date).... on the following terms of remuneration:

I. REMUNERATION

(a) BASIC SALARY
The basic salary of Mr. .................... shall be Rs. .................. per month with liberty and authority to the Board to fix the basic salary from time to time within the range of Rs. ............... to Rs. ................ per month. The changes in basic salary will be based on periodical increments linked with performance of the managing director.

(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

In addition to the basic salary and commission as may be payable as mentioned above, Mr. ................. shall be entitled to the following perquisites.

(a) ACCOMMODATION
A housing accommodation maintained by the company or House Rent Allowance in lieu thereof subject to a maximum amount of 50% of the basic salary.

(b) MEDICAL EXPENSES
Reimbursement of medical expenses incurred for self and family as per the rules of the company subject to a maximum amount of 50% of the basic salary.

For the above purpose,
“Family” includes spouse, dependent children and parents; and
Medical expenses include insurance premiums for medical and hospitalisation policy, if any

(c) LEAVE TRAVEL CONCESSION
Leave Travel Concession for self and family, once a year, incurred in accordance with the rules of the company, subject to a maximum amount of 15% of the basic salary. Here, “Family” includes spouse, dependent children and parents.

(d) PERSONAL ACCIDENT INSURANCE
Personal accident insurance cover of an amount, subject to a maximum amount of 10% of the basic salary.

(e) PROVIDENT FUND AND SUPERANNUATION FUND
Company's contribution to Provident Fund and Superannuation Fund as per rules of the company.

(f) LEAVE AND ENCASHMENT OF LEAVE
Company's payment for leave and encashment of leave as per the rules of the company.

(g) GRATUITY
Company's contribution to gratuity or gratuity fund as per the rules of the company.

(h) USE OF CAR AND TELEPHONE
Use of chauffeur driven company car for official purposes, telephone at residence and cellular phone as per the rules of the company.

(i) REIMBURSEMENT OF EXPENSES
Reimbursement of entertainment, club fees, travelling and all other expenses incurred during the official business of the company in accordance with the 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 section 198 of the Companies Act, 2013.
(b) The yearly remuneration shall be within the overall limit prescribed under Schedule V to the Companies Act, 2013.”


General Meeting Resolution Format

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

#. Appointment of Mr. ............................. as the Managing Director

“RESOLVED THAT pursuant to the provisions of sections 196, 197 and 203 read with Schedule V and other applicable provisions, if any, of the Companies Act 2013 and relevant rules made thereunder, including any statutory amendments or re-enactments thereof, 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), approval(s) and permission(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 for the appointment of Mr. .................. (DIN: ...........) as Managing Director of the company for a period of five years with effect from  ...(Date)..., whose office shall not be liable to determination by retirement of directors by rotation, on the terms and conditions set out below:

I. REMUNERATION

(a) BASIC SALARY
The basic salary of Mr. .................... shall be Rs. .................. per month with liberty and authority to the Board to fix the basic salary from time to time within the range of Rs. ............... to Rs. ................ per month. The changes in basic salary will be based on periodical increments linked with performance of the managing director.

(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

In addition to the basic salary and commission as may be payable as mentioned above, Mr. ................. shall be entitled to the following perquisites.

(a) ACCOMMODATION
A housing accommodation maintained by the company or House Rent Allowance in lieu thereof subject to a maximum amount of 50% of the basic salary.

(b) MEDICAL EXPENSES
Reimbursement of medical expenses incurred for self and family as per the rules of the company subject to a maximum amount of 50% of the basic salary.

For the above purpose,
“Family” includes spouse, dependent children and parents; and
Medical expenses include insurance premiums for medical and hospitalisation policy, if any

(c) LEAVE TRAVEL CONCESSION
Leave Travel Concession for self and family, once a year, incurred in accordance with the rules of the company, subject to a maximum amount of 15% of the basic salary. Here, “Family” includes spouse, dependent children and parents.

(d) PERSONAL ACCIDENT INSURANCE
Personal accident insurance cover of an amount, subject to a maximum amount of 10% of the basic salary.

(e) PROVIDENT FUND AND SUPERANNUATION FUND
Company's contribution to Provident Fund and Superannuation Fund as per rules of the company.

(f) LEAVE AND ENCASHMENT OF LEAVE
Company's payment for leave and encashment of leave as per the rules of the company.

(g) GRATUITY
Company's contribution to gratuity or gratuity fund as per the rules of the company.

(h) USE OF CAR AND TELEPHONE
Use of chauffeur driven company car for official purposes, telephone at residence and cellular phone as per the rules of the company.

(i) REIMBURSEMENT OF EXPENSES
Reimbursement of entertainment, club fees, travelling and all other expenses incurred during the official business of the company in accordance with the 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 section 198 of the Companies Act, 2013.
(b) The yearly remuneration shall be within the overall limit prescribed under Schedule V to the Companies Act, 2013.

RESOLVED FURTHER THAT the Board of Directors of the company be and is hereby authorised to do all such acts, deeds, things and take all such steps as may be necessary, proper or expedient to give effect to the foregoing resolution and for matters connected therewith or incidental thereto.”


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

On the recommendation of the Nomination and Remuneration Committee, the Board of Directors of your company in its meeting held on (Date) has approved the appointment and terms of remuneration of Mr. ........................ as the managing director of the company for a period of five years.

The Nomination and Remuneration Committee in its meeting held on (Date) has approved the appointment and terms of remuneration of Mr. ........................ as the managing director of the company for a period of five years.

Mr. .................., aged .... years, is a ......... graduate and also has a master's degree in .................. . He has over ....years of rich experience working in .............. industry. He has worked in global companies viz. ........., ............ and has proven his skills in the field of ...........................

He joined the company as an Additional Director w.e.f. .................... and since then has been contributing to the growth and development of the company.

The Board of Directors strongly believes the induction of Mr. .................... as the Managing Director of the company will greatly help the company to further its growth in the coming period.

Requisite notice as per section 160 of the Companies Act, 2013 is received from a member, proposing the appointment of Mr. .................... as the Managing Director at the ensuing ...th annual/ extraordinary general meeting.

Mr. ................... is eligible for appointment as a managing director under the provisions of the Companies Act, 2013 and rules made thereunder. In terms of section 152, Mr. ............. has consented to act as the Managing Director of the company, if so appointed.

In accordance with Section 196(4) of the Companies Act, 2013, the approval by a resolution at the general meeting of the members of the company is required for the appointment and terms of remuneration of Mr. ........................ as the Managing Director of the company.

Accordingly, consent of the Members is sought for passing an Ordinary Resolution as set out in item no. .... of the accompanying Notice for appointment and terms of remuneration of Mr. ................... as the Managing Director of the company for a period of five years w.e.f. ..............

A copy of the service contract entered into between Mr. ...................  and the company for the terms of appointment is available for inspection at the Registered Office of the company between 11.00 a.m. to 1.00 p.m. during office hours on all working days except Saturdays, Sundays and National Holidays.

Mr. ...................., being an appointee, and his relatives are deemed to be interested in the said resolution. None of the Directors and Key Managerial Personnel of the company and their relatives is concerned or interested, financially or otherwise, in the said resolution.

The Board commends the Ordinary Resolution as set out in item no. ... of the ...th AGM Notice for the approval of the members.