Meaning and Rights of Managerial Personnel¶
Introduction¶
A company is considered an artificial person, lacking a mind or body, incapable of acting on its own. The operation and management of a company are executed through human agents such as directors, managing directors (MD) or managers, secretaries, auditors, and legal advisors. The real control lies with the elected representatives, ensuring the company's smooth functioning and decision-making processes.
Key Managerial Personnel (KMP)¶
Meaning¶
The term 'personnel' refers to a group of people working together rather than a single individual. Key Managerial Personnel (KMP) are the core decision-makers within a company, responsible for its operational excellence. According to Section 2(51) of the Companies Act, 2013, and Accounting Standard 18 (AS-18), KMPs are individuals who have the authority and responsibility for planning, directing, and controlling the activities of the reporting entity. These personnel play a pivotal role in ensuring the company's objectives are met efficiently.
Key Managerial Personnel in a company include: - Chief Executive Officer (CEO) or Managing Director (MD): The principal executive officer, responsible for making crucial decisions and overseeing the entire organization. - Chief Financial Officer (CFO): Responsible for managing the company's finances, including financial planning, management of financial risks, record-keeping, and financial reporting. - Company Secretary (CS): Responsible for the efficient administration of a company, ensuring compliance with statutory and regulatory requirements and implementing decisions made by the board of directors. - Whole-Time Director: A director who is dedicated full-time to the company and participates in day-to-day management and decision-making processes.
Board of Directors (BOD)¶
Meaning¶
As per Section 2(10) of the Companies Act, the term 'Board of Directors' or 'BOD' refers to the collective body of directors of a company. The BOD controls, manages, and superintends the company's affairs, formulating its general policy. The board can exercise control and act collectively, with no individual director authorized to act on the company's behalf unless specifically authorized by the act, Articles of Association (AOA), a resolution of the BOD, or a resolution of the shareholders.
Rights of Managerial Personnel¶
Managerial personnel hold specific rights derived from their positions, including: - Decision-making: The authority to make strategic and operational decisions for the company. - Access to Information: The right to access comprehensive information regarding the company's operations, finances, and strategic plans. - Representation: The ability to represent the company in negotiations, contracts, and legal matters. - Compensation and Benefits: Entitlement to receive compensation and benefits as agreed upon in their contracts and as per the company's policies.
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