A managing director (“MD”) is the principal executive officer of a company, serving on its Board in an executive capacity and is at the helm of its affairs. He is primarily responsible for managing the day-to-day affairs of the company under the overall ‘superintendence, control and direction’ of the Board.Continue Reading Removal of Managing Director: Legal Position and Practical Challenges
All companies incorporated in India are mandated to constitute a board of directors,[1] to which companies appoint different kinds and classes of directors – managing director (“MD”), independent director (“ID”), non-executive and non-independent director (“NED”), whole time director (“WTD”) or executive director (“ED”). Given the pivotal role that a company’s directors play in the governance and operations of companies, the Companies Act, 2013 (“Act”), regulates different facets of a directorship from the appointment, duties, and responsibilities to the remuneration. This blog discusses the contours of remuneration limits to evaluate the length and breadth of permissible director remuneration. “Remuneration” has been defined as “any money or its equivalent given or passed to any person for services rendered by him and includes perquisites as defined under the Income-tax Act, 1961[2]”.[3]Continue Reading Evaluating the Contours of Permissible Remuneration for directors of a company in India
This piece was previously published in the Economic Times
Next on the list of dilemmas relating to corporate governance issues for independent directors (ID) of a listed company is Board Evaluations. These are 360-degree reviews of the performance of a board of directors, conducted by the Nomination and Remuneration Committee (NRC). In a formal board evaluation process, each director reviews the other.
Interestingly, based on such evaluation, the NRC has to determine (amongst other things) whether an ID should continue holding his directorship or not. Earlier on, such evaluations were voluntary and some companies have been making generic voluntary disclosures in the annual report stating that the evaluation was conducted and recommendations were absorbed for improvement of board functioning. Going forward, the content of this disclosure will change.Continue Reading Board Evaluations a Nightmare for Independent Directors?