Section 196 of Companies Act

MANAGING DIRECTOR/CEO-COS ACT+ SEBI (LODR)
1) As per Rule 2(e) of SEBI (LODR), “chief executive officer” or “managing director”
or “manager” shall mean the person so appointed in terms of the Companies Act,
2013.
2) As per Section 2(13) of Companies Act, 2013, “Chief Executive Officer” means an
officer of a company, who has been designated as such by it.
3) The chief executive officer (CEO) is a top-level executive of a company, who is

responsible for developing and implementing strategies, taking major corporate
decisions, managing the overall operations and resources of a company. The term
CEO is defined for the first time in the Act. Any person appointed as a CEO of the
company shall be one of the key managerial personnel (KMP) as per definition of
clause (51) of section 2 of the Act when such person is designated /appointed
under section 203 the Act.
4) A CEO need not be a director of the company. He may be merely an employee of

the Company. Any officer of the company may be appointed/ designated as CEO
of the Company. Further, the CEO who is not a director may be appointed by the
Board of Directors. He need not be appointed by the Shareholders of the
Company nor his appointment is subject to shareholders’ approval, unless he is a
Director of the Company. A CEO can be a director, managing director (MD), or an
employee, but no person other than the director can become a MD.
5) As per Section 2(54) of Companies Act, 2013, “managing director” means a

director who, by virtue of the articles of a company or an agreement with the
company or a resolution passed in its general meeting, or by its Board of
Directors, is entrusted with substantial powers of management of the affairs of
the company and includes a director occupying the position of managing director,
by whatever name called.
6) As per Section 2(51) of Companies Act, 2013, “key managerial personnel”, in

relation to a company, means—
(i) the Chief Executive Officer or the managing director or the manager;
(ii) the company secretary;
(iii) the whole-time director;
(iv) the Chief Financial Officer; (Omitted by the Companies(Amendment )
Act,2017)
(v) such other officer, not more than one level below the Directors who is in
whole-time employment, designated as key managerial personnel by the Board;
and
(vi) such other officer as may be prescribed;
7) As per Section 203 of Companies Act, 2013,
(1)Every company belonging to such class or classes of companies as may be

prescribed shall have the following whole-time key managerial personnel,—
(i) managing director, or Chief Executive Officer or manager and in their absence,
a whole-time director;
(ii) company secretary; and
(iii) Chief Financial Officer :
Provided that an individual shall not be appointed or reappointed as the
chairperson of the company, in pursuance of the articles of the company, as well
as the managing director or Chief Executive Officer of the company at the same
time after the date of commencement of this Act unless,—
(a) the articles of such a company provide otherwise; or
(b) the company does not carry multiple businesses:
Provided further that nothing contained in the first proviso shall apply to
such class of companies engaged in multiple businesses and which has appointed
one or more Chief Executive Officers for each such business as may be notified by
the Central Government.
(2) Every whole-time key managerial personnel of a company shall be appointed
by means of a resolution of the Board containing the terms and conditions of the
appointment including the remuneration.
8) As per Rule 8 of the Companies (Appointment and Remuneration of Managerial
Personnel) Rules, 2014, every listed company and every other public company
having a paid-up share capital of ten crore rupees or more shall have whole-time
key managerial personnel.
9) As per Clause D of PART E-DISCRETIONARY REQUIREMENTS, there should be

separate posts of Chairperson and the Managing Director or the Chief Executive
Officer
The listed entity may appoint separate persons to the post of the Chairperson
and the Managing Director or the Chief Executive Officer, such that the
Chairperson shall –
(a) be a non-executive director; and
(b) not be related to the Managing Director or the Chief Executive Officer as per
the definition of the term “relative” defined under the Companies Act, 2013.
CERTIFICATION BY CEO -REQUIREMENTS AS PER SEBI (LODR)
10) As per Clause D of Schedule V of LODR, Declaration to be signed by the chief

executive officer stating that the members of board of directors and senior
management personnel have affirmed compliance with the code of conduct of
board of directors and senior management.
11)Clause 17(8) of LODR states that the chief executive officer and the chief financial
officer shall provide the compliance certificate to the board of directors as
specified in Part B of Schedule II.
12)Clause 33(2) of LODR, while placing the financial results before the board of
directors, the chief executive officer and chief financial officer of the listed entity
shall certify that the financial results do not contain any false or misleading
statement or figures and do not omit any material fact which may make the
statements or figures contained therein misleading.

Section 196 of Companies Act

Uploaded by

Copyright:

Available Formats

Section 196 of Companies Act

Uploaded by

Document Information

Original Description:

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Section 196 of Companies Act

Uploaded by

Copyright:

Available Formats

MANAGING DIRECTOR/CEO-COS ACT+ SEBI (LODR)

3) The chief executive officer (CEO) is a top-level executive of a company, who is

4) A CEO need not be a director of the company. He may be merely an employee of

5) As per Section 2(54) of Companies Act, 2013, “managing director” means a

6) As per Section 2(51) of Companies Act, 2013, “key managerial personnel”, in

7) As per Section 203 of Companies Act, 2013,

(1)Every company belonging to such class or classes of companies as may be

9) As per Clause D of PART E-DISCRETIONARY REQUIREMENTS, there should be

(a) be a non-executive director; and

CERTIFICATION BY CEO -REQUIREMENTS AS PER SEBI (LODR)

10) As per Clause D of Schedule V of LODR, Declaration to be signed by the chief

You might also like