9911796707
TMI BlogKEY Management Personnel - Complete Information under Company Law Act, 2013 as amended from time to time.X X X X Extracts X X X X X X X X Extracts X X X X ..... KEY Management Personnel - Complete Information under Company Law Act, 2013 as amended from time to time. X X X X Extracts X X X X X X X X Extracts X X X X ..... sonnel (KMP) is defined under Section 2(51) of the Companies Act, 2013 as follows: "Key Managerial Personnel", in relation to a company, means: * the Chief Executive Officer (CEO) or the Managing Director (MD) or the Manager; * the Company Secretary (CS); * the Chief Financial Officer (CFO); * such other officer as may be prescribed under this Act. Thus, the key positions typically classified as KMPs include: * Managing Director (MD) or CEO: The person in charge of overall management and operations. * Company Secretary (CS): The person responsible for compliance, corporate governance, and corporate laws. * Chief Financial Officer (CFO): The individual responsible for financial management and accounting. * Manager: A manage ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rial personnel, if appointed, who may take charge of managing the affairs of the company. Additionally, the government may prescribe other positions to be considered as KMP through further notifications, but the above four are standard in most companies. 2. Appointment of KMPs Section 203 of the Companies Act, 2013 Under Section 203, the following provisions govern the appointment of KMPs: * Every company (other than a One Person Company (OPC)) must have the following KMPs: * Managing Director or Chief Executive Officer or Manager (depending on the company type). * Company Secretary. * Chief Financial Officer (CFO). These positions must be appointed by the Board of Directors. * * In case the company does not have the requ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ired KMPs, it is mandatory to appoint them within 6 months of the company becoming subject to the requirement (i.e., the company must comply within 6 months from the commencement of the provisions). * Appointment of MD/CEO: The appointment of Managing Director (MD), CEO, or Manager requires approval from the Board of Directors. The terms and conditions (including remuneration) for these positions must be set out in the Board Resolution and be in compliance with the shareholder approval (if necessary). * Company Secretary (CS): A company, particularly a listed company or a public company having a paid-up share capital of Rs.10 crores or more, must appoint a Company Secretary (CS), who should be a member of the Institute of Company Secret ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aries of India (ICSI). * CFO: A Chief Financial Officer should also be appointed to oversee the financial functions of the company, particularly in companies with more complex financial structures (e.g., listed companies or public companies). Section 8 Companies (Non-Profit Companies): For Section 8 Companies, the appointment of KMPs may vary depending on the nature of the company (non-profit). However, the position of Company Secretary is still required. 3. Duties and Responsibilities of KMPs The KMPs play a crucial role in the management and compliance of a company. The KMPs are responsible for ensuring compliance with: * Corporate governance standards * Regulatory requirements under the Companies Act, 2013, SEBI regulations (fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r listed companies), tax laws, securities laws, etc. Managing Director/CEO/Manager: * General management: Overseeing the day-to-day operations of the company. * Strategic direction: Implementing company policies, goals, and strategic planning. * Financial obligations: Ensuring financial reports are accurate and comply with relevant regulations. Company Secretary (CS): * Compliance: Ensuring compliance with the Companies Act, SEBI regulations, and other corporate laws. * Corporate governance: Facilitating board meetings and maintaining records. * Filing of returns: Filing necessary documents with the Registrar of Companies (RoC), ensuring the company's filings are up to date. Chief Financial Officer (CFO): * Financial ov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ersight: Supervising financial and accounting functions. * Budgeting and reporting: Ensuring accurate and timely financial statements are prepared and filed. * Taxation: Overseeing tax compliance and filing of returns. 4. Filling of Casual Vacancies in KMPs * If a KMP's position becomes vacant (e.g., due to resignation, death, or other reasons), the company is required to fill the vacancy within 6 months. * If the vacancy is not filled within the prescribed time, the company may face penalties as per the provisions of the Companies Act, 2013. 5. Remuneration of KMPs * Remuneration for KMPs must be decided by the Board of Directors and, if applicable, by shareholder approval. * As per Section 197, the remuneration of Managing D ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... irectors, Whole-time Directors, and KMPs is subject to a cap based on the company's net profits or turnover. * The overall remuneration paid to all managerial personnel (including KMPs) cannot exceed the limits prescribed by the Central Government unless approved by shareholders in a general meeting. * The company must also adhere to disclosure requirements for executive compensation and should disclose the remuneration paid to the KMP in the Director's Report under the Companies Act. 6. Penalties for Non-Compliance Failure to appoint the required KMPs (as per Section 203) or non-compliance with the provisions of the Companies Act, 2013 related to KMPs can attract the following penalties: * For the company: A fine of up to Rs.5 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lakh. * For officers of the company: A fine of Rs.50,000 to Rs.5 lakh, and in case of continuing contravention, an additional fine of Rs.1,000 per day. 7. Disclosure Requirements Related to KMPs * Companies are required to disclose the following KMP-related information in their annual reports: * Details of KMP appointments (including any changes in KMP). * Remuneration paid to KMPs. * Other terms of appointment. * For listed companies, the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (LODR) also require the disclosure of the remuneration and compensation packages of KMPs. 8. Other Provisions Related to KMPs Independent Directors and KMPs: While KMPs (like MD, CEO, CFO, CS) have specific management ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... roles, Independent Directors (IDs) are not typically classified as KMPs. However, for the purpose of corporate governance, the roles of IDs are important, and their compensation and remuneration are disclosed in the company's annual report. Reporting of KMP Changes: * If a KMP changes (e.g., due to resignation, death, etc.), the company must report this change to the Registrar of Companies (RoC) within a specified period, and also update relevant stakeholders. Conclusion: Key Managerial Personnel (KMP) in a company, as per the Companies Act, 2013, are crucial for corporate governance and regulatory compliance. They include positions like Managing Director, CEO, CFO, and Company Secretary, with specific duties and responsibilities. Comp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... anies must ensure that KMPs are appointed in accordance with the Act's provisions and that the necessary disclosures are made regarding their remuneration and appointments. Failure to comply with these provisions can lead to penalties and legal consequences. X X X X Extracts X X X X X X X X Extracts X X X X
|
