ROC, Bangalore imposes penalty of Rs. 10 lakh on the company for failure to co-opt MD as Additional Director

 

 

Here is a short Overview of the case:

(i) company appointed as MD and CEO of a company (KMP) for a period of 5 years through Board Resolution.
(ii) By inadvertence, Board had omitted to co-opt him as Additional Director before appointing him as MD
(iii) pursuant to the said omission, the approval for his appointment by the shareholders (regularization) at the first AGM was omitted to be obtained
(iv) consequently, MD was deemed to have vacated his office w.e.f. the date of the AGM in terms of Sec. 161 of the Companies Act

Conclusion:

ROC, Bangalore imposes penalty of Rs. 10 lakh on the company, its Directors, KMPs & Company Secretary for failure to co-opt MD as Additional Director before his appointment as MD, in contravention of Sec. 161 of the Companies Act.

The copy of the order is as under:

 

ROC Banglore