Ch4 Chief Executive & Other Officers - Sheet1 Flashcards
Definition: Chief executive [Section 2(14)]
“chief executive”, in relation to a company means an individual who, subject to the control and directions of the directors, is entrusted with the whole, or substantially the whole, of the powers of management of the affairs of the company
and includes a director or any other person occupying the position of a chief executive, by whatever name called, and whether under a contract of service or otherwise.
Restriction on appointment (ineligibility) [Section 189]
A person who is ineligible to become a director of a company shall not be appointed or continue as the chief executive of any company.
Appointment of first chief executive [Section 186]
The name of first chief executive shall be determined by subscribers of memorandum. His specified particulars
shall be submitted along with the documents of incorporation. The first chief executive shall hold office up to the
first AGM unless shorter period is fixed by the subscribers at the time of his appointment. He may earlier resign
or be removed from his office.
Notwithstanding above provisions, the Government shall have the power to nominate chief executive of a public
sector company in such manner as may be specified.
Appointment of subsequent chief executive [Section 187]
Appointment time limit
The subsequent chief executive shall be appointed within 14 days of the election of the directors themselves or
occurring of casual vacancy in the office of chief executive.
Appointment of subsequent chief executive [Section 187]
Term of Office
The subsequent chief executive shall be appointed for a maximum period of three years.
The chief executive appointed against a casual vacancy shall hold office till the directors elected in the next
election appoint a chief executive. The retiring chief executive can be re-appointed.
Appointment of subsequent chief executive [Section 187]
Retiring Chief Executive to Continue until successor is appointed
Retiring chief executive shall continue to perform his services until his successor is appointed unless:
* his office was expressly terminated; or
* non-appointment of his successor is due to any fault on his part.
Appointment of subsequent chief executive [Section 187]
Nomination by Federal Government
The Government shall have the power to nominate chief executive of a company, where majority of directors are
nominated by the Government.
Terms of appointment [Section 188]
Terms and conditions
The terms and conditions of appointment of a chief executive are determined by the directors or the company in
general meeting in accordance with the provisions in the articles. The terms and conditions of appointment of a
chief executive nominated by government shall be determined by the Government, in such manner as may be
specified.
Terms of appointment [Section 188]
Reports to board
He reports to board and he cannot exceed his authority which has been granted by board of directors.
Terms of appointment [Section 188]
Status of a director
The chief executive, if not already a director, shall be deemed to be a director in addition to his being a chief
executive of the company. He shall be entitled to all the rights and privileges, and subject to all liabilities, of being
a director.
Removal of chief executive [Section 190]
Chief executive may be removed through any of the following modes at any point in time regardless of any
provisions in the articles or in his appointment to the contrary:
* by passing a special resolution in general meeting of the company; or
* by passing a resolution in the board of directors meeting supported by at least three-fourth of the
number of directors;
* by Government/authority/person authorised by it, where more than 75% of the voting rights are held
by the Government.
Not to engage in competing business [Section 191]
Restriction
In case of a public company, a chief executive, his spouse and minor children are prohibited to engage in a
business which competes with the business of the company in which he is a chief executive or with the business
of any of its subsidiary company.
Not to engage in competing business [Section 191]
Disclosure on appointment
Every person who is appointed as chief executive of a public company is required to disclose to the company in
writing the nature of such business and his interest therein.
Chairman of a listed company [Section 192]
The board of a listed company shall within 14 days from date of election of directors, appoint a chairman from
among the non-executive directors.
The chairman shall be responsible for leadership of board and ensure that the board plays an effective role in
fulfilling its responsibilities. The annual financial statements shall contain a review report by the chairman on
the overall performance of board and effectiveness of role played by board in achieving the objectives.
The chairman shall hold office for 3 years unless he earlier resigns, becomes ineligible or disqualified or removed
by the directors.
The board shall clearly define the respective roles and responsibilities of chairman and chief executive. The
Commission may specify the classes of companies for which the chairman and chief executive shall not be the
same individual.
Public company required to have secretary [Section 194]
The company secretary is responsible for advising the board on compliance of corporate laws and for
maintenance of relevant records and registers.
A public company must have a company secretary, possessing such qualification as may be specified.
