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Ordinary resolution appointment of Chief Operating Officer COO

A Chief Operating Officer (COO) is one of the highest ranking executives in an organisation. Generally, after the Chairman position and CEO/Managing Director position, the COO ranks as the most powerful employee of a company.

resolution for appointment of chief operating officerThe COO is responsible for overlooking the daily business and other operations of the company. COO reports to the CEO and/or Chairman.

Considering the performance of the COO and his ability to overlook more important areas of work in the company, he may be appointed by the Board both as a COO and Executive Director of the company subject to approval of the shareholders.

Following is a template of an ordinary resolution to be passed in the general meeting of the shareholders of a company for appointment of a Chief Operating Officer and Executive Director of the company.

Imp. Note: Do refer the latest provisions of the Companies Act and the rules thereunder and any other applicable provisions before finalising the resolution. Following sample is only for reference.


SAMPLE

#. Appointment of Mr. / Ms. ...................................... as Chief Operating Officer and Executive Director of the Company

To consider and, if thought fit, to pass the following resolution, with or without modification(s), as an Ordinary Resolution:

“RESOLVED THAT pursuant to the provisions of sections 196, 197 and other applicable provisions, if any, of the Companies Act, 2013 ("the Act") read with Schedule V to the Act and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, as amended from time to time, the company hereby approves the appointment and terms of remuneration of Mr. / Ms. ...................................... (DIN: ................) as Chief Operating Officer and Executive Director of the company for a period of five years with effect from ..(Date).. upon the terms and conditions set out in the Explanatory Statement annexed to the Notice convening this Annual General Meeting, (including the remuneration to be paid in the event of loss or inadequacy of profits in any financial year during the tenure of her/his appointment) with authority to the Board of Directors to alter and vary the terms and conditions of the said appointment in such manner as may be agreed to between the Board of Directors and Mr. / Ms. .......................................”

“RESOLVED FURTHER THAT the Board of Directors of the company (which term shall be deemed to include any Committee of the Board constituted to exercise its powers, including the powers conferred by this Resolution) be and is hereby authorised to take all such steps as may be necessary, proper and expedient to give effect to the foregoing Resolution.”


Explanatory Statement

As required by Section 102 of the Companies Act, 2013 ("the Act"), the following explanatory statement sets out all material facts relating to the business mentioned under Item No. ... of the accompanying Notice:

Item No. ...

The Board of Directors, at its meeting held on ..(Date).. appointed Mr. / Ms. ......................................, as an Additional Director of the company with effect from ..(Date)... The Board, at the same meeting, has also appointed her/him as the Chief Operating Officer and Executive Director ("COO & ED") of the company effective the same date, for a period of five years, subject to the approval of the Members.

Her/His appointment has been recommended by the Nomination and Remuneration Committee. The Audit Committee has also approved the terms and conditions of her/his appointment, as she/he, being the brother of Mr. / Ms. ......................................, is a related party as per Section 2(76) of the Act. (mention, only if applicable)

As per the provisions of Section 161(1) of the Act, she/he holds office of Additional Director only up to the date of the forthcoming Annual General Meeting of the company, and is eligible for appointment as Director. The company has received a notice under Section 160(1) of the Act proposing her/his candidature for the office of Director of the company, along with the requisite deposit.

Mr. / Ms. ...................................... was elevated to the role of COO & ED on ..(Date)... Prior to taking over the COO's role, she/he served as the (Designation), a ......... unit of the company. In that role, she/he was responsible for ......................... of the company for over ....years. (Mention some details about his/her work in the company and previous achievements, expertise in particular segments.)

Mr. / Ms. ...................................... holds ......... degree in ............ (Mention his/her educational details.)

Further details of Mr. / Ms. ...................................... have been given in the Annexure to this Notice.

The main terms and conditions of appointment of Mr. / Ms. ...................................... (hereinafter referred to as “COO and ED”) are given below:

A. Tenure of Appointment:

The appointment as COO & ED is for a period of five years with effect from ..(Date)...

B. Nature of Duties:

The COO & ED shall devote her/his whole time and attention to the business of the company and shall perform such duties as may be entrusted to her/him by the Chief Operating Officer and Managing Director of the company and/or the Board from time to time and separately communicated to her/him and exercise such powers as may be assigned to her/him, subject to the superintendence, control and direction of the Board in connection with and in the best interests of the business of the company and the business of one or more of its associated companies and/ or subsidiaries, including performing duties as assigned to the COO & ED from time to time by serving on the Boards of such associated companies and / or subsidiaries or any other executive body or any committee of such a company.

C. Remuneration:

a. Basic Salary:
Current Basic Salary of INR .............. per month; up to a maximum of INR .............. per month.

The annual increments which will be effective 1st April each year, will be decided by the Board based on the recommendations of the Nomination and Remuneration Committee (“NRC”) and will be performance-based and take into account the company's performance as well, within the said maximum amount.

b. Benefits, Perquisites, and Allowances:
Details of Benefits, Perquisites, and Allowances are as follows:
 i. Rent-free residential accommodation (partly furnished or otherwise) with the company bearing the cost of repairs, maintenance, society charges and utilities (e.g., gas, electricity, and water charges) for the said accommodation or house rent, house maintenance and utility allowances aggregating ...% of the Basic Salary (in case residential accommodation is not provided by the company).
 ii. Hospitalisation and major medical expenses, Car facility, Telecommunication facility and Housing loan facility as per Rules of the company.
 iii. Other perquisites and allowances given below subject to a maximum of ...% of the Basic Salary; this shall include medical allowance, leave travel concession / allowance and other allowances / personal accident insurance / club membership fees.
 iv. Contribution to Provident Fund, Superannuation Fund or Annuity Fund and Gratuity Fund as per the Rules of the company.
 v. Leave and encashment of unavailed leave as per the Rules of the company.

c. Commission:
In addition to Salary, Benefits, Perquisites and Allowances, the COO & ED would be paid such remuneration by way of Commission, calculated with reference to the net profits of the company in a particular financial year, as may be determined by the Board of the company subject to the overall ceilings stipulated in Section 197 of the Act. The specific amount payable to the COO & ED will be based on her/his performance as evaluated by the Board or the NRC and approved by the Board and will be payable annually after the annual accounts have been approved by the Board.

D. Minimum Remuneration:

Notwithstanding anything to the contrary herein contained, where in any financial year during the tenure of the COO & ED, the company has no profits or its profits are inadequate, the company will pay remuneration by way of Salary, Benefits, Perquisites, Allowances and Commission subject to further approvals as required under Schedule V of the Act, or any modification(s) thereto.

E. Other terms of Appointment:

The COO & ED shall enter into an agreement, containing, inter alia, the following terms:

 i. The COO & ED shall not become interested or otherwise concerned, directly or through her/his spouse and / or children, in any selling agency of the company.
 ii. The terms and conditions of the appointment of the COO & ED may be altered and varied from time to time by the Board as it may, in its discretion deem fit, irrespective of the limits stipulated under Schedule V to the Act or any amendments made hereafter in this regard in such manner as may be agreed to between the Board and the COO & ED, subject to such approvals as may be required.
 iii. The Agreement may be terminated by either party by giving to the other party six months' notice of such termination or the company paying six months' remuneration in lieu thereof.
 iv. The employment of the COO & ED may be terminated by the company without notice or payment in lieu of notice:
    a. if the COO & ED is found guilty of any gross negligence, default or misconduct in connection with or affecting the business of the company or any subsidiary or associated company to which she/he is required to render services; or
    b. in the event of any serious repeated or continuing breach (after prior warning) or non-observance by the COO & ED of any of the stipulations contained in the Agreement.
 v. Upon the termination by whatever means of the COO & ED's employment:
    a. the COO & ED shall immediately cease to hold offices held by her/him in any holding company, subsidiaries or associated companies without claim for compensation for loss of office by virtue of Section 167(1)(h) of the Act and unless the Board of Directors of the company decide otherwise, shall resign as trustee of any trust connected with the company;
    b. the COO & ED shall not without the consent of the company, at any time thereafter represent herself/himself as connected with the company or any of the subsidiaries or associated companies.
 vi. All Personnel Policies of the company and the related Rules which are applicable to other employees of the company shall also be applicable to the COO & ED, unless specifically provided otherwise.
 vii. The terms and conditions of appointment of the COO & ED also include clauses pertaining to adherence with the company's Code of Conduct, and maintenance of confidentiality.
 viii. If and when the Agreement expires or is terminated for any reason whatsoever, the COO & ED will cease to be the COO & ED, and also cease to be a Director. If at any time, the COO & ED ceases to be a Director of the company for any reason whatsoever, she/he shall cease to be the COO & ED, and the Agreement shall forthwith terminate. However, the Board may at its discretion decide that COO & ED shall continue as Director of the company.

In compliance with the provisions of Sections 196, 197 and other applicable provisions of the Act, read with Schedule V to the Act, the terms of appointment and remuneration of the COO & ED as specified above are now being placed before the Members for their approval. The Board commends the Resolutions at Item No. ... for approval by the Members.

Except Mr. / Ms. ...................................... and her/his relatives, none of the Directors and Key Managerial Personnel of the company and their respective relatives is concerned or interested, in the resolution set out at Item No. ... of the Notice.


Annexure

Details of Directors seeking Appointment/ Re-appointment at the Annual General Meeting

Particulars                             Mr./Ms. ...(Name)...

Date of Birth (Age)                 .................................

Date of Appointment               .................................

Qualifications                          .................................

Expertise in specific
functional areas                       .................................

Directorships held in
other public companies
(excluding foreign
companies and Section 8
companies)                             .................................

Memberships /
Chairmanships of
committees of other
public companies
(includes only Audit
Committee and
Stakeholders'
Relationship Committee.)      .................................

Number of shares held in
the company                          .................................

Comments

  1. Thank you for the format of the resolution

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