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Murali (Advocate and Corporate Consultant)     24 June 2010

Difference between MD and CEO

Can somebody please clarify the following issue.

Whether a listed company can have a managing director and a CEO who is not a member of the board. The clarification may plz be issued keeping in view of the following specific points.

Under corporate governance in the listing agreement, the board of directors shall lay down a code of conduct for all teh members of the board and senior management excluding the members of functionaries of the board. Senior management is defined as the management of first level after the functional directors. Sub Clause V of Clause 49 (CEO) with the managing director or manager appointed in  terms of the Companies Act 1956. Code of conduct mandates that the annual return of the company shall contain a declaration by CEO as regards. Compliance with the code of conduct by the members of the board and senior management. Listing agreement does not postulate that it shld be signed by the CEO, but the signature of the MD s mandated.

The definitions under section II under teh companies act 1956 defines the words MD and manager. Section 197 A barrs appointment of MD and manager at a time with substantial powers of management.

In the light of the baove can the listed comapny having MD can appoint a CEO who is not a member of the board and entust him certain powers of management. If so is he not considered as a manager within the meaning of section 2 of companies act 1956 and does it not amount tp violation of section 197 A.

I am in need of the above claification in connection with a lecture and can somebody on priority plz furnish the same for which i wld be highly obliged.

Murali Krishna..



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 2 Replies

Adv. Gulammayudin A. Gagdani (LEGAL ADVISOR)     24 June 2010

yes.

it will be like this.

go to following links

https://www.allinterview.com/showanswers/70437.html

https://www.differencebetween.net/business/difference-between-md-and-ceo/

it does not violate sec 197 A.

Murali (Advocate and Corporate Consultant)     24 June 2010

Dear Mr Gulammayudin,

Thank you very much for your quick reply. The links provided by you  are really helpful. Once again my sincere thanks.

regards,

Murali Krishna W


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