Tag Archives: Manager

Chairman, Managing Director, CEO, Proprietor – the Difference

Difference between various business positions is quite confusing for the general public. Here, we will discuss, what is the difference between a chairman, a managing director, a CEO, and a proprietor?

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Amendment in Schedule V

Ministry of Corporate Affairs, on 12th September 2016 issued notification amending Schedule V of the Companies Act, 2013. Schedule V deals with managerial remuneration in cases of inadequate profit and to some extend managerial appointment in public companies.

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We have already discussed remuneration of managerial personnel under Section 197 read with Schedule V of the Companies Act 2013. In addition to managerial remuneration under Section 197 a company may pay sitting fees to its directors.

According to Rule 4 of the Companies (appointment and Remuneration of Managerial Personnel) Rule 2014, a company may pay a sitting fee to a director for attending meetings of the Board or committees thereof, such sum as may be decided by the Board of directors thereof which shall not exceed one lakh rupees per meeting of the Board or committee thereof. For Independent Directors and Women Directors, the sitting fee shall not be less than the sitting fee payable to other directors.

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Section 196 of the companies Act 2013 deals with appointment of certain managerial personnel namely; Managing Director, Whole time Director and Manager. Remuneration of these managerial personnel is discussed in Section 197 read with Schedule V of the Companies Act 2013. Section 203 of this Act further deals with appointment of certain other managerial personnel along with managerial personnel already discussed in Section 197.

According to Rule 3 of the Companies (appointment and Remuneration of Managerial Personnel) Rule, 2014, A company shall file a return of appointment of a Managing Director, Whole Time Director or Manager, Chief Executive Officer (CEO), Company Secretary and Chief Financial Officer (CFO) within sixty days of the appointment, with the Registrar in Form MR – 1 along with such fee as may be specified for this purpose. We have earlier discussed Form MR – 1 in detail here.

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We have much earlier discussed “Appointment of Managing Director and Manager” and “Managerial Remuneration in case of inadequate profit”. I understand, Section 197 read with Schedule V is a code for managerial remuneration. Now, we will discuss other relevant provision for managerial remuneration.


In computing the net profit of a company in any financial year credit shall be given for:

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A Charge under the Companies Act, 2013 means an interest or lien created on the property and assets of the company or any of its undertakings or both as security and includes mortgage.


Every company creating a charge shall register the particulars of charge signed by the company and its charge – holder together with the instruments creating such charge with the Registrar within thirty days of its creation.

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UPDATE: on 30th August 2013: Companies Bill 2012 became the Companies Act, 2013 (Act 18 of 2013).

The Board of Directors is most powerful body in a company. The Corporate governance is until now is governance of the Board.

The Companies Bill 2012 has dedicated chapter i.e. Chapter XII dealing with Board meetings and its power.  In this blog I will discuss Board Meetings and in a future post power of Board of Directors.

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UPDATE: on 30th August 2013: Companies Bill 2012 became the Companies Act, 2013 (Act 18 of 2013).

Managerial remuneration is one of major corporate governance issue in India. Promoters and controlling shareholders consider themselves owner of company and get maximum remuneration. Difference between corporate tax rate and income tax rate also priority to withdraw much money from “owned” company. Indian concept of “owned company” and corporate governance has co – existence in last two decades.

In my last post, I did not analyse legal issues of managerial remuneration in case of inadequate profit under Companies Bill 2012 (Now the Act).

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UPDATE: on 30th August 2013: Companies Bill 2012 became the Companies Act, 2013 (Act 18 of 2013).

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

Managing Director is Key Managerial Personnel of utmost importance. He is the face of a company and its decision-making mechanism. A person gains significant advantages as Managing Director which may not be there, in case of his appointment as Manager or Chief Executive Officer. While Chief Executive Officer has no special advantage except his clubbing as Key Managerial Personnel with Manager and Managing Director, Manager has some. Their definitions speak themselves. Appointment of Managing Director, Whole – Time Director and Manager is governed by the provision of Section 196 of the Bill. They all are a different class of Key Managerial Personnel and has the specific provision of appointment in addition to Section 203, discussed in an earlier post.

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UPDATE: on 30th August 2013: Companies Bill 2012 became the Companies Act, 2013 (Act 18 of 2013).

In any jurisdiction, Quality of Corporate Governance and compliance of ethics depends upon quality of people taking charge of the affairs. The companies Bill 2012 have some inbuilt elements of corporate governance in it. First time Concept of Key Managerial Personnel is being introduced in India. Which seems different with “officer who is in default” as that concept is still in this Bill.

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