Full Form of MD - Managing Director
Who is The Managing Director of the Company- A Managing Director is a
Director who is trusted with substantial powers of Management. The managing
Director is a part of the Board of Directors and a whole-time director committed
to certain rights and responsibilities for the company.
Appointment of Managing Director
The managing Director of a company can be appointed for a maximum term of five years and re-appointed for an additional term of five years, one year before the expiry of the original term. A company may appoint a managing director or a whole-time director in any one of five ways unless the articles of the company specify a particular mode of appointment mentioned below-:
· By an agreement with the company.
· By a resolution passed by the company in a general meeting.
· By the resolution passed by the Board of Directors.
· By the memorandum of association.
· By the articles of association.
Responsibilities of Managing Director
A Private Limited Company can appoint or employ only one person as its managing director. Some of the major responsibilities of a managing director are:
· Exercise his duties with due and reasonable care, skill and diligence, and
independent judgment.
· Not involved in a situation in which he may have a direct or indirect interest
that conflicts, or possibly may conflict, with the interest of the company.
· Not achieve or attempt to achieve any undue gain or advantage either to
himself or to his relatives, partners or associates and if such director is
found guilty of making any undue gain, he shall be liable to pay an amount
equal to that gain to the company.
· Not assign his office and any assignment so made shall be void.
Disqualifications of Managing Director
The following are reasons and causes for disqualifications of a Managing Director: -
· The director is below the age of 21 years and has attained the age of 70
years- granted that appointment of a person who has attained the age of
70 years may be made by transferring a special resolution in which case the
explanatory statement annexed to the notice for such motion shall indicate
the justification for selecting a such person.
· The Director is undischarged bankrupt or has been adjudged insolvent at
any time.
· The Director has been sentenced by a court and convicted for more than six
months.