Application to Central Government for appointment of Managerial Personnel

[NOTE: The law stated in this post is effective from 12th September 2018. For the law applicable from 1st April 2014 till 11th September 2018, please visit here.]

We discussed the appointment of managing director and whole time directors recently here as per the law effective from 12th September 2018. A careful reading suggests that recent amendment done away with the requirement of the central government for payment of remuneration of managerial personnel. This amendment also eased procedure for appointment of managerial personnel with the limited requirement for central government approval for such an appointment. We will discuss the same, in this post.

Super Senior Citizen Director

This provision deals with the employment of a senior citizen with age of not less seventy years. The appointment of such senior citizen is permitted.  A company may appoint a person on these positions, who has attained the age of seventy years by passing a special resolution. Where it is proposed to appoint a person who has attained aged of seventy years, an explanatory statement justifying such appointment shall be annexed to the notice for the motion of appointment. {Sub – section (3)}

Where such motion was moved to pass as a special resolution and could not get required support but a majority, the appointment of such senior citizen is possible with the approval of central government.

Where no such special resolution is passed but votes cast in favour of the motion exceed the votes, if any, cast against the motion and the Central Government is satisfied, on an application made by the Board, that such appointment is most beneficial to the company, the appointment of the person who has attained the age of seventy years may be made. {Sub – section (3) second proviso with effect from 12th September 2018}

Non confirmation of Eligibility criteria

Where, the appointment a managing director or whole time director is at variance to the conditions specified in Part I of the schedule V, this appointment shall also be subject to the approval of the Central Government. {Sub – section (4)}

Part I of the Schedule V of the Act has flowing criteria:

  1. No imprisonment or fine exceeding one thousand rupees in certain offences;
  2. No detention in COFEPOSA, 1974;
  3. Attained age of twenty-one years and has not attained the age of seventy years; and
  4. A resident of India.

Imprisonment or fine exceeding one thousand rupees in certain offence

He had not sentenced to imprisonment for any period or to any fine exceeding one thousand rupees, for the conviction of an offence under any of the following Acts, namely:—
(i) the Indian Stamp Act, 1899 (2 of 1899);
(ii) the Central Excise Act, 1944 (1 of 1944);
(iii) the Industries (Development and Regulation) Act, 1951 (65 of 1951);
(iv) the Prevention of Food Adulteration Act, 1954 (37 of 1954);
(v) the Essential Commodities Act, 1955 (10 of 1955);
(vi) the Companies Act,2013 (18 of 2013) or any previous company law
(vii) the Securities Contracts (Regulation) Act, 1956 (42 of 1956);
(viii) the Wealth-tax Act, 1957 (27 of 1957);
(ix) the Income-tax Act, 1961 (43 of 1961);
(x) the Customs Act, 1962 (52 of 1962);
(xi) the Competition Act, 2002 (12 of 2003);
(xii) the Foreign Exchange Management Act, 1999 (42 of 1999);
(xiii) the Sick Industrial Companies (Special Provisions) Act, 1985 (1 of 1986);
(xiv) the Securities and Exchange Board of India Act, 1992 (15 of 1992);
(xv) the Foreign Trade (Development and Regulation) Act, 1922 (22 of 1922);
(xvi) the Prevention of Money-Laundering Act, 2002 (15 of 2003);
(xvii) the Insolvency and Bankruptcy Code, 201.6 (31 of 2016);
(xviii) the Goods and Services Tax Act,20t7 (12 of 2017);
(xix) the Fugitive Economic Offenders Act, 2018 (17 of 2018)]

No detention in COFEPOSA, 1974

He had not been detained for any period under the Conservation of Foreign Exchange and Prevention of Smuggling Activities Act, 1974 (52 of 1974)


He has completed the age of twenty-one years and has not attained the age of seventy years.


He is a resident of India.

Resident in India

The  resident in India includes a person who has been staying in India for a continuous period of not less than twelve months immediately preceding the date of his appointment as a managerial person and who has come to stay in India,—
(i) for taking up employment in India; or
(ii) for carrying on a business or vacation in India.

The Requirement of employment visa

A person, being a non-resident in India shall enter India only after obtaining a proper Employment Visa from the concerned Indian mission abroad. For this purpose, such person shall be required to furnish, along with the visa application form, profile of the company, the principal employer and terms and conditions of such person’s appointment.

No remuneration for non- resident without approval

A company may not give remuneration to a non – resident without central government approval.

Special Economic Zone

This condition shall not apply to the companies in Special Economic Zones as notified by the Department of Commerce from time to time.

One time approvals

One time approvals are enough in case of cased related to imprisonment or fine under the law mentioned under clause (a) or detention under COFEPOSA under clause (b).

Case to case approvals

In the case of age and resident status, it requires the case to case approval.

Application before Central Government

Every application made to the Central Government under the provisions of Chapter XIII shall be made in Form MR – 2 and shall be accompanied by the fee as may be specified for the purpose. {Rule 7(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014, as amended}

Every such application seeking approval shall be made to the Central Government within a period of ninety days from the date of such appointment. {Rule 7(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014, as amended}

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