Page 299 - DMGT407Corporate and Business Laws

Corporate and Business Laws

Notes Thus, an individual must be in charge 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
(e) is, or has at any time within preceding five years been convicted of an offence involving
moral turpitude.
3. 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; (b) Ss. 310-311:
Provisions for increase in remuneration requires Government approval; (c) s.312:
Prohibition of assignment of office by a director; (d) s.317: Term of appointment to be not
more than five years at a time.

Notes Distinction between a Managing Director and a Manager
The following points of distinction between the two are worth noting:
1. A managing director is entrusted with substantial powers of management. A
‘manager’, on the other hand, has the management of the whole or substantially the
whole of the affairs of a company.

2. A company may have more than one managing director but it cannot have more
than one manager.
3. A managing director is appointed either under an agreement or by a resolution of
the Board or general meeting or under the provisions of the Memorandum or Articles.
A manager, on the other hand, is usually appointed either under a contract of service
of by the Board of directors though the Articles may also provide for his appointment.
4. A managing director must be a director whereas a manager may or may not be a
director.
5. A managing director, on his ceasing to be a director, shall automatically cease to be
the managing director as well. A manager-director, however, can continue as a
manager even though he ceases to be a director.
6. The grounds of disqualifications of a managing director as given in Section 267
remain effective for whole life and cannot be waived by the Central Government.
Most of the grounds of disqualification of a manager as given in section 385 are only
for five years and can also be waived by the Central Government.

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