All About Key Managerial Personnel under Co Act 2013

Complete understanding about Key Managerial Personnel

Brief Introduction

A new concept of Key Managerial Personnel  was introduced under the Companies Act,2013. This idea is essentially for bringing all the heads into one main head as all of them are a part of the corporate. because the board of directors set goals and objective of the corporate. But KMPS play important role within the day-to-day activity of the corporate and helps in achieving the goal of the corporate. Section 2(51) of the companies Act,2013 provides the legal definition of “Key Managerial Personnel”.

Scope of Key Managerial Personnel(KMP)

Key Managerial Personnel means

• CEO, MD, or Manager.
• Company Secretary.
• Whole Time Director.
• Chief financial officer.
• Any other officer, being one level below the Whole-time director, and
• Such other officer as prescribed.

Appointing Requirement of KMP

As per section 203 of Companies Act,2013 along with the rule 8 of companies Rules, 2014, the subsequent class of the corporate would be required to compulsorily appoint KMP:

• Every Listed Company
• Public Company, Paid-Up Capital 10 crore or more

Apart from this, rule 8A of Companies Rules,2014 provides that the company having paid-up capital of more than equal to Rs. 10 crores, is mandatorily required to appoint a whole-time company secretary in their Board of Directors.

 

KMP as Director of Other Company

KMP will obtain permission from the board for being the director of the other company. Permission are granted by the board within the committee meeting. And if permission is given then it’ll be told to all the directors of the corporate. If the board doesn’t grant the permission then he can not be the director of the other company.

Vacancy in Key Managerial Personnel

• In case, the office of any KMP, stands vacant, then the same shall be filled up within 6 months from the date of arising of such vacancy.

Procedure for Appointment of KMP

• KMPs are required to be appointed, as per the provisions of section 203 of companies Act, 2013. Such an appointment shall be made by passing of resolution by the board of directors of the said entity. Also, the appointment letter of such a KMP shall mention the terms and conditions of appointment along with the details of their remuneration.
• If there’s a vacancy it’s to be filled within 6 months of such vacancy.
• In case corporate violates the supply of appointment of managerial personnel, the corporate needs to suffer a penalty. Fine are of 1 lakh rupees which can extend upto 5 lakh rupees.

Maintenance of Register of KMP

• The company which can be falling under the supply of Key Managerial Personnel is required to keep up a register. Such a register shall contain the particulars of the directors and KMPs and same shall be placed at the registered office address of the corporate entity.
• The document includes information on securities held by them within the company or its holding, subsidiary of a company or associate company.

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Roles and Responsibility of KMP

• The KMPs are chargeable for non-compliance of the provisions provided under the companies Act,2013.
• Management functions and therefore the decisions of the corporate are the responsibility of the KMPs.
• As per section 170, detailed information of securities are going to be provided by KMPs and recorded within the register of the corporate.
• In the audit committee, the correct to heard are provided to KMPs while considering the audit report. But they don’t have the proper to vote.
• According to section 189(2), KMPs are required to disclose their concerns and interest, within 30 days from the date of their appointment.

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Disqualifications of KMP

Section 196(3) of the companies Act,2013 states that an organization shall not appoint or continue the utilization of a managing director, whole-time director, or manager if such person:

• Not completed age of 21years or exceeds 69 years of age.
• Uncharged insolvent or adjudged insolvent person.
• Record of holding payments from creditors.
• Convicted by the court for an offence punished with imprisonment for quite 6 months.
• Not appointed for quite 5 years at a time.
• Detained under the contravention of Prevention of Smuggling Activity Act,1974.

Penal Provisions related to Key Managerial Personnel

• If an organization breaches the provision of section 203, then the corporate should pay a penalty of Rs. 5 lakh.
• In case Director or KMPs breaches the availability, then they need to pay a penalty of Rs. 50,000. In case the default continues, the said person would be liable for a penalty of Rs. 1000 per day of default.

Conclusion

• The KMP plays a really important role within the company. As they work for the day to day operation of the corporate so, that the target of the corporate is achived.
• The ministry of corporate affairs and security exchange made the compulsory appointment of the KMP within the company. and supply the actual law for the appointment of KMP in companies Act,2013. So, that company can operate within the spirit of the law

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