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Thursday, January 3, 2008

Number of Companies a Person can be Appointed Manager Sub-section

(1) of Section 386 disallows the appointment or employment of any person as

manager if he is either the manager or the managing director of any other company except as provided in sub-section (2) of Section 386. As per

sub-section (2) of Section 386, a company may appoint or employ a person as its manager, if he is the manager or managing director of one, and not

more than one, other company. However, such appointment or employment must be made or approved by a resolution passed at a meeting of the Board

with the consent of all the directors present at the meeting, and of which meeting and of the resolution to be moved thereat, specific notice was given to all

the directors then in India.

The Central Government has been further empowered under sub-section (4) of Section 386 to permit, by order, any person to be appointed as a manager

of more than two companies, if it is satisfied that it is necessary that the companies should, for their proper working, function as single unit and have a

common manager. It may, however, be noted that Schedule XIll provides for obtaining the approval of the Central Government for the appointment of a

person as a Manager in the second company itself.

Remuneration of Manager (Section 387). The manager of a company may, subject to the provisions of Section 198, receive remuneration either by way of

a monthly payment, or by way of a specified percentage of the ‘net profits’ of the company calculated in the manner laid down in Sections 349 and 350 or

partly by one way and partly by the other. However, except with the approval of the Central Government, such remuneration shall not exceed in the

aggregate five per cent of the net profits calculated as above.

Application of Sections 269, 310, 311, 312 and 317 to Managers. The provisions of certain sections relating to managing directors have been made

applicable to managers also (Section 388). These provisions include:

(a) Section 269: appointment or re-appointment requires Central Government approval except in cases specified under Schedule XIII;

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