Search Resolutions Here

Draft AGM Resolution for Re-appointment of Managing Director

A company shall not appoint or re-appoint any person as its managing director for a term exceeding five years at a time. The terms and conditions of such appointment or reappointment and the remuneration payable to the managing director is required to be approved by the Board of Directors or its committee in their meeting, which shall be subject to approval by a resolution at the next general meeting of the members (shareholders) of the company and subject to approval by the Central Government in certain cases.

draft resolution for reappointment of managing directorOnly when the company wishes to make payment to the managing director exceeding the limits prescribed under the companies act, the company is required to obtain the approval of the shareholders by passing a special resolution, if the remuneration is within the limits then ordinary resolution will be sufficient.

Please do read carefully Sections 196, 197, 203, Schedule V and any other applicable provisions of the Companies Act, 2013 and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, to determine whether ordinary or special resolution is required and what other approvals are required to be obtained.

Template of such ordinary resolution is as follows —

Specimen Resolution for Reappointment of Managing Director

#. Re-appointment of Mr. / Ms. ................................. as the Managing Director

To consider and, if thought fit, to pass the following resolution as an Ordinary Resolution:

“RESOLVED THAT in accordance with the provisions of Sections 196, 197 and 203 read with Schedule V and any other applicable provisions of the Companies Act, 2013 and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 (including any statutory modification(s) thereto or re-enactment thereof for the time being in force) and pursuant to Article .... of the Articles of Association of the company and subject to any other approvals as may be required, the consent of the members of the company be and is here accorded for re-appointment of Mr. / Ms. .................................... (DIN: ..............), as the Managing Director of the company, for a period of five years with effect from (Date), and the payment of such remuneration as may be determined by the Board or any of its Committee, from time to time, within the maximum limits of remuneration for Managing Director approved by the members of the company on such terms and conditions as set out in the foregoing resolution and the explanatory statement annexed hereto.

RESOLVED FURTHER THAT the Board of Directors or any of its Committee be and is hereby authorised to do all such acts, deeds, things, matters and take all such steps as may be necessary, proper or expedient to give effect to the foregoing resolution.”



Explanatory Statement

Item #...

Ms. / Mr. (Name of the Managing Director) was appointed as the Managing Director of the company for a period of five years with effect from (Date), after obtaining due approval of the members of the company in their ..th Annual General Meeting held on (Date). Accordingly, the present term of Ms. / Mr. (Name of the Managing Director) comes to an end on (Date).

The Board, in its meeting held on (Date), has approved the re-appointment of Mr. / Ms. .............. as the Managing Director of the company for a further period of five years after his/her current tenure ends on (date). The Board has taken the decision of said re-appointment based on the recommendation of the Nomination and Remuneration Committee and subject to the approval of the members of the company.

Ms. / Mr. (Name of the Managing Director) is not disqualified from being re-appointed as a Director  or Managing Director in terms of Section 164 of the Companies Act, 2013. He/She has communicated her/his willingness to be re-appointed and has given his consent to act as Managing Director of the company. He/She satisfies all the conditions as set out in Section 196(3) of the said Act and Part-I of Schedule V thereof and hence, is eligible for re-appointment.

A brief profile of Ms. / Mr. (Name of the Managing Director) is provided in the “Annexure” to the Notice pursuant to the provisions of (i) the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 and (ii) Secretarial Standard on General Meetings (“SS-2”), issued by the Institute of Company Secretaries of India.

It is proposed to seek Members’ approval for the re-appointment of and remuneration payable to Ms. / Mr. (Name of the Managing Director) as a Managing Director, in terms of the applicable provisions of the said Act and the Rules made thereunder.

Broad particulars of the terms of re-appointment of and remuneration payable to Ms. / Mr. (Name of the Managing Director) are as under:

(a) Salary:

Basic Salary: (Amount) per annum

(b) Perquisites and Allowances:

 i. The company’s contribution to provident fund, superannuation or annuity fund, gratuity payable, statutory contribution to retirement funds and encashment of leave, as per the rules of the company, shall be in addition to the basic salary mentioned under (a) above, and as per the limits prescribed under the applicable laws of the country.

 ii. The Managing Director shall be entitled to perquisites for a maximum sum of (amount) per annum, which includes rent free accommodation (furnished or otherwise) for self with family or house rent allowance in lieu thereof,  company car with chauffeur, house maintenance allowance together with reimbursement of expenses and / or allowances for telephone at residence / cellular phones,  utilisation of gas, electricity, water, furnishing and repairs, club membership fees, medical assistance coverage, leave travel concession for self and family including dependents and other benefits / allowances in accordance with the scheme(s) and rule(s) of the company from time to time, for the aforesaid benefits.

(c) Reimbursement of Expenses:

The Managing Director shall be reimbursed at actuals for all the expenses incurred by him/her for travelling, boarding and lodging including for his/her spouse and attendant(s) during business trips conducted on behalf of the company. These reimbursement of expenses will not be included in the calculation of the remuneration or perquisites of the Managing Director.


(d) Bonus / Employees Stock Options:

The Managing Director shall be paid Performance Linked Bonus in each financial year, based on the performance parameters as may be determined by the Board of Directors or any of its Committee. These bonuses shall not be considered as a part of perquisites under (b) above.

The Managing Director may be granted employees stock options from time to time, which shall not be considered as a part of perquisites under (b) above.

(e) Minimum Remuneration:

In the event of loss or inadequacy of profits in any financial year, during the currency of the term of the Managing Director, the company will pay remuneration to the Managing Director, within the maximum ceiling per annum as per Section II of Part II of Schedule V to the Companies Act, 2013, including any statutory modification(s) or re-enactment(s) thereof, for the time being in force, as per the recommendation of the Nomination and Remuneration Committee and the approval of the Board of Directors of the company.

(f) Commission on Profits:

The Managing Director may be paid  during a financial year commission on profits for that year at a rate as may be determined by the Board of Directors or its committees. Such commission on profits shall be included in the calculation for the aggregate remuneration payable to the Managing Director and the Whole-time Directors in a financial year by way of salary, perquisites and allowances, incentive / bonus / performance linked incentive, remuneration based on net profits, etc. which shall not exceed in the aggregate one percent of the net profits of the company in that financial year as computed in the manner laid down in Section 198 of the Companies Act 2013 including any statutory modification(s) or re-enactment(s) thereof.

Ms. / Mr. (Name of the Managing Director) holds ........... Equity Shares of the face value of Rs. .../- each in the company, which amounts to ...% of the total number of equity shares of the company.

Ms. / Mr. (Name of the Managing Director) has been associated with the company for last ...years and has contributed a great value in the growth and success of the company with her/his rich expertise in the industry where the company operates. It would be in the interest of the company to continue to avail of his considerable expertise and to re-appoint her / him as the Managing Director.

This Explanatory Statement may also be considered as the requisite abstract under Section 190 of the Companies Act, 2013 setting out the terms and conditions of appointment of Mr. / Ms. ......................... as the Managing Director of the company.

Save and except Ms. / Mr. (Name of the Managing Director), and their relatives to the extent of their shareholding interest, if any, in the company, none of the other Directors, Key Managerial Personnel of the company and their relatives are, in any way, concerned or interested, financially or otherwise, in the aforesaid resolution.

The Board commends the Ordinary Resolution set out at Item No. .. for the approval of Members.

Comments

  1. Nimis Patel1/26/2019

    thank you for the help. i'm learning better now in drafting resolutions and all

    ReplyDelete

Post a comment

Leave Your Comments Here