Emeritus Chairman vs Chairman


In India, most companies have designation of Chairman but there is no legally recognised office of chairman of company under the Companies Act, 2013. In Indian law, chairman or chairperson is not legal position but a momentary position in meetings.

Chairman under the company law is person appointed/elected as chairman of the Meeting of Board of Directors or meetings of members (general meetings). To avoid time to appoint/select/elect chairman in each such meeting, usually board of directors names a person as its chairman once. Chairman of the Board of Directors may act as chairman of the company (means chairman of its general meetings). However, this position usually treated as permanent designation for a person.

Section 104 of the Companies Act, 2013, talk about chairman of meetings. In some later sections term chairperson is also used in same meaning.

Indian Secretarial Standards bring some legal definition for the position of chairman.

For Indian Secretarial Standards SS – 1 dealing with meetings of Board of Directors, Chairman means the Chairman of the Board or its Committee, as the case may be, or the chairman appointed or elected for a meeting.

For Indian Secretarial Standards SS – 2 dealing with general meetings, Chairman means Chairman of the Board or the Chairman appointed or elected for a Meeting.

These definitions given in Indian Secretarial Standards give some legal backing for permanently appointed chairman of the board.

Chairman Emeritus is more ceremonial position. Chairman Emeritus is an honorary position usually given to people who have retired from the position. It is just a respect to person named so. Chairman Emeritus is like a head of family who lost all powers to younger generation but have high regards at least in society (if not in the family). More often than not, Chairman Emeritus conducts meetings just by presence and all legal responsibilities rest on named chairman.

Basic responsibility of chairman is to conduct a meeting and certify as correct the proceeding when noted down as minutes of meeting. Thus, legally chairman is higher and actual position.

In listed companies, Chairman is preferably a non – executive position and sometime independent directors need to be elected as chairman. Chairman of most committees of Board should legally be an independent director. In private companies and closely held companies managing director act as chairman. In family owned head of family acts as chairman.

This post was earlier written as Quora answer here.

 

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