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Key Managerial Personnel is responsible for laying down the strategies as well as its implementation. They are the people who hold key positions in the Company and posses greater responsibility for the overall functioning of the Company including the duty to protect the interest of the stakeholders.
These inclusions are in line with the global trends. “Company Secretary” has also been brought within the ambit of Key Managerial Personnel giving them the long-deserved recognition of a Key Managerial Personnel of the Company. The exclusive feature of these management roles is that they are considered as a cluster of a team rather than emphasizing on a single individual.
In the current write up, we have explored this concept of Key Managerial Personnel as put forth in the Companies Act, 2013 read with the relevant rules made thereunder.
Table of Contents
Key Managerial Personnel is defined by the Companies Act, 2013 as follows:
“Key Managerial Personnel”, in relation to a Company, means a person who holds the designation of or is appointed as:-
The last point gives power to the legislature to include some other person within the purview of Key Managerial Personnel as when they deemed it fit and necessary from time to time.
Let us now proceed to understand how these six personnel are defined under the Act.
The above definitions depict that in the case of CEO and CFO, the designation is crucial to deem the person as CEO and CFO whereas in the case of MD and Manager the functions discharged or the role performed by an individual is taken as the test to deem them as the MD or Manager. The definition of whole time director is an inclusive definition, and CS is defined to mean a CS as per the Company Secretaries Act, 1980 who is duly appointed to perform the functions of a company secretary.
Following Companies are needed to appoint Key Managerial Personnel mandatorily:
All such Companies which are having paid up share capital of Rs. 5 crore or more shall appoint a whole time company secretary. All such details are provided under Rule 8A of the Companies (Appointment and Remuneration of Managerial Personnel) Rule, 2014.
Few Limitations in case of Appointment of Key Managerial Personnel:
In case where any company doesn’t comply with the provisions of the section, then such company will be liable for a penalty of 5 lakhs and every director and KMP of the company who makes such default will be liable to a penalty of 50000 rupees.
Key Managerial Personnel are vested with some of the most essential roles and responsibilities. They are key players when it comes to operation of the company.
Read our article:
Non-receipt of Subscription Money under Companies Act, 2013
Ashish M. Shaji has done his graduation in law (BA. LLB) from CCS University. He has keen interests in doing extensive research and writing on legal subjects especially on corporate law. He is a creative thinker and has a great interest in exploring legal subjects.
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