Page 230 - DCOM404_CORPORATE_LEGAL_FRAMEWORK

Unit 10: Share Capital

While the term ‘managing director’ has been specifi cally defined under Section 2(26), no such Notes

definition of a whole time director is available. Explanation to Section 269, however, states that
the expression ‘whole time director’ includes a director in the whole time employment of the
company.
Regarding appointment/re-appointment and remuneration of whole time director, same
provisions as are applicable to a managing director, are applicable. Under section 269, every
public company and a private company which is a subsidiary of a public company must have
a managing director a whole-time director if its paid-up share capital is ` 5 crores or more.

Similarly Sections 267 and 268 providing for disqualifications of managing directors and
approval of Central Government for their appointment/re-appointment also make the provisions
applicable to whole time directors. Also, the provisions of Sections 309, 310 and 311 dealing
with remuneration of directors and other managerial personnel are applicable to whole time
directors.
Distinction between Managing Director and Whole Time Director

However, the following points of distinction between a managing director and a whole time
director may be noted:
1. A managing director may be appointed in that capacity in two or more companies at the
same time but a whole-time director, by virtue of his whole time employee cannot act as
such in more than one company.
2. The tenure of a managing director of a public company or a private company which is the

subsidiary of a public company cannot be more than five years at a time. There is no such
restriction in the case of a whole-time director.
10.7.5 Manager

Section 2(24) states that “manager means an individual who, subject to the superintendence,
control and direction of the Board of Directors, has the management of the whole, or substantially
the whole of the affairs of the company and includes a director or any other person occupying
the position of a manager, by whatever name called and whether under a contract of service or
not”.
Thus, an individual must be incharge of the whole or substantially the whole of the business of
the company, in order to be called a manager in accordance with the Act. A person who is one
of the departmental managers or a branch manager is not deemed to be a manager in this sense.
Some of the more important legal provisions about managers are summarised as follows:
(1) Only an individual can be appointed a manager of a company (s.384)

(2) Section 385 lays down the disqualifications of a Manager. No company shall appoint
or continue the appointment or employment of any person as its manager, who (a) is

an undischarged insolvent; or (b) has at any time within the preceding five years been
adjudged an insolvent; or (c) suspends, or has suspended payment to his creditors; or (d)
make, or has at any time, within the preceding five years made a composition with his

creditors; or (c) is, or has at any time within preceding five years been convicted of an
offence involving moral turpitude.
(3) A person may not be appointed manager of more than 2 companies.
(4) The provision of the following sections relating to managing directors have been made
applicable to Manager also (s.388);
(a) S.269: Appointment or re-appointment requires Government approval except in
cases specified under Schedule XIII;

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