Section 203 of CA 2013 : Section 203: Appointment Of Key Managerial Personnel

Explanation using Example

Imagine a medium-sized tech company, "InnovateX", which falls under the class of companies required to have whole-time key managerial personnel (KMP) as per Section 203 of the Companies Act, 2013. The company has a Managing Director (MD), a Company Secretary (CS), and a Chief Financial Officer (CFO) as its KMPs.

Recently, the MD of InnovateX resigned, leaving the position vacant. According to Section 203(4), the Board of Directors must fill this vacancy within six months. They schedule a meeting and appoint a new MD, ensuring the resolution includes terms and conditions of the appointment, including remuneration, as required by Section 203(2).

Furthermore, the newly appointed MD was already serving as the manager of another company, "TechCorp". Section 203(3) allows this dual role, provided the appointment is approved by a unanimous resolution of the Board and all directors in India are given specific notice of the meeting and the resolution.

If InnovateX had failed to appoint a new MD within the six-month period, or if any of the directors or KMPs had violated the provisions of Section 203, the company and the individuals responsible would face penalties as outlined in Section 203(5).