chief executive officer

Section 5 of the Act provides a list of officers of a company who are defined as “officers in default” so that those in charge of management or who have been charged with the responsibility of complying with any of the provisions of the Act are held responsible for any contravention of the Act. A Managing Director of a company is also included in this list of officers who are liable for the defaults and lapses of the company. The other officers in this list are Whole-time Directors, Manager, Company Secretary and certain other specified persons. There should be adequate disclosure of age in the company’s documents.

A Managing Director is typically the highest-ranking executive in a company, while a Whole Time Director is a member of the company’s board of directors. The Chicago Booth ADP is a rigorous learning journey across 8 modules spread over 9 months and gives you access to the latest management thinking and tools. It is taught by an award-winning faculty at the Chicago Booth School of Business and accomplished senior business leaders. It creates an amazing opportunity to build a strong personal brand and competitively position yourself and your organization.

36.2 The Committee recognizes that to enable all companies to access good quality managerial talent, efforts by various institutions, organizations and associations to train directors should be encouraged. An important role can be played in this respect by professional bodies, chambers of commerce, trade associations, business and law schools. Such efforts, while upgrading the skills of directors would also expand the pool of candidates from which such candidates may be selected. Such efforts should aim at better discharge of fiduciary duties and value enhancing board activities.

III. Existing Legal Framework

It is not the designation but the duties entrusted to a person that qualify a person to be a CEO. The CEO is an executive officer of the Company and could be the Managing Director or a Whole-time Director of a company. A CEO is usually appointed for the management of whole or substantially the whole of the affairs of the company by a resolution of the Board of Directors. As mentioned earlier, Section 5 of the Act provides for a list of officers of a company as “officers in default”, to hold them responsible for the contraventions of provisions of the Act. A CEO would also be included in this list as the CEO is a person who directs the Board of Directors and advises the Board on several matters. The CEO also acts in a fiduciary capacity and also as an agent of the company for the purpose of managing the whole or substantially the whole of the affairs of the company.

A Whole Time Director, on the other hand, is a member of the company’s board of directors who is also a full-time employee of the company. Further the independence of the audit committee is also of prime importance which gets enhanced when they report to the board and not the CEO. If the chairperson and CEO is the same person, then reporting freely to a member of the management i.e.


Hence a part time director cannot be compensated for the loss of office or paid consideration for retirement from office, or in connection with such loss or retirement. Regulation 60 of the Table A Articles deals with the right of the Chairman to decide on objections raised with regard to the qualification of any voter at the meeting or adjourned meeting at which the vote objected to is given or tendered. Every vote not disallowed at such meeting shall be valid for all purposes. The decision of the Chairman of the meeting on the validity of any such objection raised in due time is final and conclusive. The Chairman is not, in law, automatically entitled to have a second or casting vote and the Articles can negate such a casting vote. However, normally Articles governing an Indian company are those adopted from Table A where Regulation 74 gives him a casting vote.

As per Section 2 of the Act, 2013, Managing Director and Whole-Time Director are considered as a company’s Key Managerial Personnel. In general terms, a Managing Director is a person who is responsible for administering the daily operations of a company. He is also liable to plan, direct and control the functioning of the company. On the other hand, a Whole-Time Director includes a director who is in the whole-time employment of the company, commits whole of his time and attention to carry on the affairs of the company in question and has a considerable personal interest in the company as his source of income. Most of the provisions of the Act dealing with requirements to be fulfilled in respect if the issuance of prospectus do not use the phrase the officer in default in order to attribute liability in case of default. 5.1 Law should provide for minimum number of directors necessary for various classes of companies.

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The board of directors is elected by the shareholders of a company and is often composed of both inside administrators, who are senior officers of the corporate, and out of doors administrators, who are people not employed by the company. The board establishes corporate management insurance policies and decides on huge-image company issues. Under Section 293 of the present Act certain restrictions have been placed on the Board of Directors of a public company or of a private company, which is a subsidiary of a public company from deciding on certain matters except with the consent of the shareholders of such company in a general meeting. This provision should be reviewed and it should be provided that the consent of the shareholders should be through a special resolution for certain items such as those presently mentioned in 293 , and of the present Act. Shareholders’ approval should be required for sale of whole or substantially whole of the undertaking in that financial year.

What does managing director meaning?

The Sebi chief said the underlying idea for such a separation is not to weaken the position of promoter, but to improve corporate governance. They are not required to be present and devote all their time to the company’s affairs. AppointmentAppointed by company shareholders or nomination committee through the letter of employment. Both positions are typically full-time roles, meaning they are expected to devote a significant amount of time to the company.

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After 2020, SEBI may examine extending the requirement to all listed entities with effect from April 1, 2022. Both positions may be compensated with a salary and/or equity in the company. They can build strong relationships with external stakeholders, such as customers, suppliers and investors, which can be beneficial for the company’s reputation and bottom line. Risk of isolation, as the Managing Director is often the highest-ranking person in the company. Potential for legal liability if the company faces legal or regulatory issues.

Distinguish between the following: Director and Managing Director – Secretarial Practice

Chief Executive Officer and Managing Director are the 2 key and senior most members of an organization. However, both Chief Executive Officer vs Managing Director can perform duties related to one another, but the mere existence of those two corporate titles indicates that there will be a substantial difference of their roles. Typically, responsibilities embrace being a call maker on strategy and different key coverage points, leader, supervisor, and executor. The communicator function can contain speaking to the press and the rest of the outside world, in addition to to the group’s management and employees; the decision-making position entails excessive-degree selections about coverage and strategy. As a pacesetter of the corporate, the CEO advises the board of administrators, motivates staff, and drives change within the organization. The Companies Act does not provide for any definition for the term ‘General Manager’.

Opportunities to network and build relationships with key industry leaders. Potential for personal and professional growth and development. Responsibility for the overall performance and success of the company. A Managing Director typically has a higher level of authority and autonomy compared to a Whole Time Director. Executive pay is decided by a corporate board, meaning a CEO who is also chair votes on their own compensation—a clear conflict of interest. Find out what exactly is the AI ChatGPT by OpenAI and how can it be leveraged by businesses and individuals.

On the other hand, when a chairman is appointed on a part time basis, an MD is required to be appointed. As per the Companies Act, 2013 , a CEO means an officer of a company, who has been designated as such by it. Whereas, a managing director, essentially, is a director entrusted with substantial powers of management of the affairs of the company and includes a director occupying the position of managing director, by whatever name called.


In general, a managing director is typically higher in the organizational hierarchy than a vice president in India, as the managing director is the highest-ranking executive in a company’s management team and is responsible for the overall performance of the organization. However, this may not always be the case, as job titles and responsibilities can differ between companies. Non-executive directors benefit the company as they are driven by the company’s best interests in mind and assist in monitoring activities without any bias.

Filling Up of Vacancy In the Office of a Managing Director

In the case of difference between chairman and managing directorly traded companies, the disclosure of such an appointment shall be made to the stock exchange within 24 hours of the board meeting date and posted on the company’s website within two working days. Non-executive directors assist in monitoring aspects of business activities and provide objective insights for decision-making. They manage the company’s activities and engage in high-level responsibility. The whistle-blowers who report the misappropriation and mismanagement within the corporations would be limited in exercising their actions when these employees are connected to the individuals who cost the fraud and other abuse directly to the committee without reprisal would be threatening. When the Board is led by management, employees may be insecure in reporting such activities, and the audit committee may be less likely to act on such reports. Thus, it requires the separation of roles between the CEO and the Chairman.

The Directorate of Company Affairs has by a circular indicated that this interpretation given by the High Court of Rajasthan is correct. The Kotak Committee on Corporate Governance in October, 2017, recommended that with regard to companies in which the public holds more than 40% stake, the chairperson of the board should be a non-executive director. The intent behind this recommendation was separation of powers of the Chairperson and the MD/ CEO in listed companies, to provide a more balanced governance structure and effective supervision of the management by the board. Board’s responsibilities inherently demand the exercise of judgment. Therefore the Board necessarily has to be vested with a reasonable level of discretion. While corporate governance may comprise of both legal and behavioral norms, no written set of rules or laws can contemplate every situation that a director or the board collectively may find itself in.

As the services are rendered whole-time, rationally, a director cannot be in whole-time employment in more than one company. Nevertheless, the Companies Act, 2013 by virtue of Section 203 allows a Whole-Time Director to be appointed as a Whole-Time Director in a subsidiary company at the same time. As per Section 2 of the Act, 2013, “Whole-Time Director” includes a director in the whole-time employment of the company. This definition is inclusive and refers to a director who has been in employment with the company on a full-time basis and is entitled to receive remuneration. Furthermore, there was also confusion as to whether a whole-time employee is a Whole-Time Director. The Company Law Board clarified that a whole-time employee appointed as a director of the company is in the position of a Whole-Time Director.

A General Manager is usually any person who is in charge of management of only a specific area / department of the company. A General Manager exercises supervision and control over his subordinates but is subject to the superintendence and control of the Board of Directors. In a few cases the person designated as the General Manager of a company could subject to the superintendence and control of the Board of Directors, have the management of the whole or substantially the whole, of the affairs of the company. In such case the General Manager would qualify as the Manager for the purposes of the Act, provided that Company has no Managing Director. The Court may compel such person to repay the money owed or pay damages, even though such person may also be criminally liable. However, the Court has held that where a company suffers loss on account of breach of duty on the part of a director or the Managing Director, he is liable to compensate the company to the extent of such loss.

What status to a disqualified managing director of a public limited co. to appear before the court of law in a suit instituted by him on behalf of the co. In the corporate world, a chairman is a person who usually elected or appointed to chair meetings of the Board of Director or Members of a company. Some organizations have subordinate govt officers who even have the word chief in their job title, similar to chief working officer , chief financial officer and chief expertise officer . Chairman or Managing Director and CEO can be the same person both head of the Board and running the company as a full-time employee, in some cases, it is in the hands of two different individuals. Hold a general meeting and obtain approval of shareholders for appointment of Managing Director by means of a resolution. However, a person can be appointed as Managing Director even after he has attained the age of 70 years on the passing of a special resolution wherein the explanatory statement annexed to the notice for such motion shall specify the justification for appointing such a person.

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Both may be involved in making strategic decisions for the company. They can provide oversight and direction for the company’s operations, which can help to ensure that the company is running smoothly and efficiently. They are able to provide continuity in leadership and decision-making, which can be beneficial for the company’s long-term growth and stability. Also the separation may lead to duplication of hard work and may prevent timely and appropriate decisions due to division of the top roles.

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