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Companies Act,2013 Provisions related to Key Managerial Personnel

Who manages a company?

A company is managed by Board of Directors on behalf of the owners or shareholders. This is the crux of corporate management, that is why we call the ownership and management of a company is different. The owners will contribute money or moneys worth to the common stock of the company and then appoint directors who are professionally qualified with experience to manage their money to create profit maximisation and wealth maximisation.

Who are Key Managerial Personnel in a company?

But in reality it may be even difficult for the directors to run the company as wished by owners, as they may not be having specialist management skills to run the show. In these times they need somebody who can focus on selected level of activities with precision, so they will appoint Key Managerial Personnel.

Companies act on Key Managerial Personnel.

Companies Act, 2013 have specific provisions for the appointment of KMP and it is provided under sections from 196 to 205.

Relevant sections are reproduced below, detailed classes at Rajeev’s ArthaCS, only CS Gurukulam in South India.


196. Appointment of MD/WTD/MANAGER

197. Overall maximum managerial remuneration

198. Calculation of profits

199. Recovery of remuneration in certain cases

200. CG or company to fix limit with regard to remuneration

201. procedure in relation to, certain applications

202. Compensation for loss of office

203. Appointment of key managerial personnel

204. Secretarial audit for bigger companies

205. Functions of company secretary

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