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Managing Director Vs Whole Time Director of a Company

private limited
board of directors

These matters should not be left to Resolution by circulation since this practice is open to abuse. The suggestions made in the Companies Bill, 2003 may be taken as the basis. In second proviso, the Company needs to file Form MR-1 to ROC within 60days from such appointment. First proviso says that the notice convening Board Meeting or General Meeting shall specify the T&C, Remuneration payable and such other matters including interest of any director in such appointment of Managerial Personnel.

Is a managing director higher than a director?

Does a managing director have more powers than a normal director? Company law makes no distinction between a managing director and any other kind of director, and provides no definition of the term 'managing director'.

Thus, three different individuals shall be appointed in whole time employment of the prescribed companies for holding office as KMP, as section 203 of the Act is not designation specific but it is specific to individuals holding such designations. This is so because the three designations are crucial and these are intended to be held by three individuals in whole-time employment of a company. The Act though defines the terms, CEO and CFO but does not provide for any specific functions to be performed by them. The term ‘CEO’ and ‘CFO’ are globally accepted management positions. In general business parlance, while a CEO is vested with the vast powers of management and operations of company, CFO is responsible for handling the functions related to finance in the organization. The director shall also forward a copy of his resignation along with detailed reasons for the resignation to the Registrar within thirty days of resignation.

1 Directors as Agents

In Indian States Bank Ltd. v Sardar Singh, it was held that the management of the companies should be in proper hands and hence, the appointment of directors is strictly regulated by the said Act. The success of the company depends upon the competence of its directors. The Committee considered the concept of exclusion of interested shareholders from participation in the General Meeting in events of conflict of interest. The Committee felt that this was an aspect of good Corporate Governance which may be adopted by companies on voluntary basis by making a provision in the Article of Association of the company. In view of the issues related with enforcing compliance of such requirements, there need not be any specific legal provision for the purpose.


We have successfully worked with over 5 lakh customers, and have now registered over 10% of all the companies registered in India. He/she should not assign his/her office since such assignments are void under the law. The authority to affix the company’s common seal to any document.

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It was held in the case of Guinness plc v. Saunders that director in question is bound to hand over the benefits , if any, that he might have secured under the transaction and he cannot ask for set off for any claim that he may have against the company. Higher deposit amount for notice regarding nominating/appointing a director. Has at any time been convicted by a court of an offence and sentenced for a period of more than six months. Also, If the company not able to pass Special Resolution but passed Ordinary Resolution then also the Company can continue the MD who aged 70 years or more, only after CG feels it is beneficial to the company and approves the reappointment of such MD.

A Managing Director is, on the other hand, among the highest leaders at an organization and usually functions under the CEO. The Managing Director is responsible for the day-to-day functioning of the company. In some companies, the Managing Director is answerable to the company’s shareholders in matters that regard the company’s future.

If you have wondered who is the senior-most between the CEO and Managing Director of a company, or what the difference between the two roles are, then you are not alone. Their roles are largely different and both are essential to a company’s smooth running, depending on the company. Make appropriate entries in the register of directors and other records and registers of the company.

Role and Responsibility of CEO

They must have the courage to look to any deteriorating situation related to stock market, finance and especially moral issues. They should not exercise the powers for their own or in a fiduciary capacity but for a proper purpose, for which they are given to them by the shareholders. 34.1 Stakeholders / Board look towards certain Key Managerial Personnel for formulation and execution of policies and to outside independent professionals for independent assurances on various compliances. The Committee feels it desirable to dwell on such managerial personnel who have a significant role to play in the conduct of affairs of the company and determine the quality of its Governance. The Committee is of the view that such key Managerial Personnel may be recognized by the law, along with their liability in appropriate aspects of company operation. There need not be any limit prescribed to sitting fees payable to non-executive directors.

  • Therefore, the institution of suit for the benefit of the company was within the power and authority of the managing director.
  • Such person has the same powers as the original director and holds the office until the return of the original director.
  • We have helped more than 450+ clients for LLP and Private Limited Company registration.
  • Director can work in 20 companies at a time wherein a maximum of 10 public companies at a time.
  • It was noted that in the current competitive environment, where Indian companies would be competing for specialized man-power globally, it may not be feasible or appropriate for the Government to intervene in such decisions.

The alternate director will hold the office till the term of the existing director on whose place he has been appointed or if the existing director returns to India. It shall formulate the criteria for determining the qualifications of a director and recommend a policy to the Board regarding the remuneration for directors and other employees. The committee while formulating the policy for remuneration should take care that it is reasonable and motivate directors of the quality required to run the company.

13 Independent Director

The typically reports to the board of directors or the highest-ranking executive in the company and leads the management team in setting and achieving business goals. In the case of publicly 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. A manager is an individual who has the management of the whole, or substantially the whole, of the affairs of a company.

What is the difference between a managing director and a CEO?

While a CEO may represent the company's public image, they are also the highest-ranking superior at a company, and a managing director handles the company's day-to-day operations and ensures everything runs as efficiently as possible.

For example, professional directors, nominee directors, etc. A company can increase the maximum number of directors by passing a special resolution. The role of Director and Manager is an integral part of any organization.

The CEO has the responsibility to facilitate business, and should also have a strategic vision to align the company, both internally and externally. A CEO has to guide the employees and the executive officers. 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 scenario of e-filing, DIN is a pre-requisite for filing of certain company related documents.
  • Neither they possess any financial relationship with the company nor can own shares in the company.
  • 11.2 The term ‘material’ needs to be defined in terms of percentage.
  • If a company which is not required to mandatorily appoint a KMP appoints it, then such company is not bound to comply with the other provisions of section 203 of the Act with respect to the KMP.

Every existing director should intimate his/her DIN within one month of its receipt to the company or all companies where he/she is appointed as a director. Every company should intimate the DIN of all the directors of the company to the Registrar of Companies. The CEO is the company’s chief leader and reports to the board of directors, which is chaired bythe chairman. The Managing Director on the other hand has a vastly different place in the hierarchical order. In others, their role might be at par with the CEO and they might also be a part of the board of directors. 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.

A Managing Director may or may not be a member of the board of directors, while a Whole Time Director is always a member of the board. Director can work in 20 companies at a time wherein a maximum of 10 public companies at a time. Directors are elected representatives of the shareholders managing company in absence of shareholders. They can be agents of the company but not employees of the company.

difference between director and managing directors are the supreme executive authority who controls the management of a company, and the directors are collectively known as the Board of Directors of the company. A Director is elected by the shareholders for the purpose of managing the affairs of the company. As the Private Limited company is an artificial judicial person but it cannot act on its own, so it acts through the agent called the director who is a natural person. Section 196 of the Companies Act, 2013 states that a managing director and a manager cannot be appointed or employed in a company at the same time.


A Director might be held liable personally, for debts or other liabilities of a company in case he was knowingly a party to the fraud while carrying on the business. So, a CEO’s role might or might not be higher than that of a Managing Director’s. It depends largely on the company’s corporate and hierarchical structure. As per Section 2 of the Act, 2013, “Whole-Time Director” includes a director in the whole-time employment of the company.

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We have partnered with institutes like the Indian Institute of Management Calcutta, IIM Lucknow, Indian School of Business to create high-impact executive education programmes. There are many leadership and management courses offered by Emeritus that will give your career the boost it requires. Leaders are individuals who may not possess or display power; instead, they would use human assistance to accomplish a goal. A great leader is someone who can do this day after day, and year after year, under any circumstance. Build a system of budgetary control by which the actual performance of the company may be evaluated against the planned course of action. To review and present the operations of the company to the Board periodically accounts and statistics showing the progress and the present po­sition of the company.

If a company wants to appoint more than 15 directors, they can do so by passing a special resolution in the company. Directors of a company are personally liable together with the company for repaying the share application money or the surplus share application money received if it is not repaid within the specified time period. An executive director is the full-time working director of the company. They look after the affairs of the company and have a higher responsibility towards the company. As per the law, every company needs to appoint a director who has been in India and stayed for not less than 182 days in a previous calendar year.

What is the different between director and managing director?

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. A Managing Director usually reports to the board of directors, while a Whole Time Director is a member of the board and reports to the shareholders.

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