The Rules regarding of duration of Managing Director –
Managing Director is responsible for the performance of the company, which is generally dictated by the board’s overall strategy. The term managing Director is defined in Section 2(26) of the Act. The Managing Director is a director who is “entrusted with any substantial powers of management”. The power to do administrative acts of a routine nature when so authorized by the Board (e.g., the power to affix the common seal of the company or to draw and endorse any cheque etc.) shall not be deemed “substantial powers of management”.
The term Managing Director includes a director occupying the position of a managing director, by whatever name called. As a member of higher management, the managing director is also anticipated to remain a company solvent and to promote development and improvement within the business.
Whole Time Director
A whole time director is a director who is entrusted with certain duties and responsibilities. He is an employee of the Company. The ambit of his jurisdiction is defined by his contract of employment. The articles of some Companies contain the provisions regarding their services, it can be inferred that a whole time director gives the whole or most of the working time to the Company. The term “Whole time director” has not been defined in the Act, but it has been used with the term managing director in sections of the Act.
Appointment of Managing Director and Whole Time Director
The appointment of a managing director or of a whole time director can be made by any of the methods –
(i) an agreement with the company, or
(ii) a clause in a memo or articles of the company, or
(iii) a resolution passed by a company in its general meeting, or
(iv) a resolution of the Board of directors.
Managing Director’s responsibilities includes:
- Successfully implementing company policy
- Developing strategic plans and controlling finance
- Maintaining a dialogue between shareholders and the board
- Building and maintaining an effective management team.