• Madhvi Patidar

Section 203 Of Companies Act 2013: Appointment Of Key Managerial Personnel (KMP)

Updated: Jun 21


What is a Key Managerial Personnel?

Key Managerial Personnel ("KMP") refers to the whole-time employees of the company who are vested with the most important roles and responsibilities. They are the first point of contact between the company and its stakeholders and are responsible for the formulation of strategies and their implementation. The Companies Act,2013 ("Act") mandates certain classes of companies to include such personnel on their Board.


Companies That are Required to Appoint Key Managerial Personnel


According to section 203 of the Companies Act, 2013 read with the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 below mentioned companies are required to appoint the Whole-time KMPs

· Listed Company

· Public Company having paid-up share capital of Rs. 10 Crores or more

Further, under Rule 8A of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, a company other than the companies stated above is required to appoint a Whole-time Company Secretary which is having a paid-up share capital of Rs. 10.00 Crores or more.

Compliances required for the appointment of KMPs as per the Companies Act,2013:

1. The KMP shall be appointed by passing a resolution subject to ratification by members of the Company in the Board Meeting by determining its terms and conditions of appointment including remuneration.

2. The Company should file form MGT-14 & DIR-12 with the Registrar of Companies (ROC) within 30days of the passing of such resolution.

3. In case of appointment of Whole-time Director and Managing Director, the Public Company is required to file form MR-1 with the ROC within 60 days of such appointment.

4. The listed company are also required to comply with the SEBI (LODR) Regulation 2015 concerning the appointment or resignation of KMPs.


Manner of Appointment of Key Managerial Personnel

Every whole-time key managerial personnel of a company shall be appointed using a resolution of the Board containing the terms and conditions of the appointment including the remuneration.

If the office of any whole-time key managerial personnel is vacated, the resulting vacancy shall be filled-up by the Board at a meeting of the Board within 6 months from the date of such vacancy.


Time Limit for the Appointment of Key Managerial Personnel

The provision of section 203 under the Companies Act, 2013 is notified with effect from 1st April 2014. So, at the time of commencement of the Companies Act, 2013, a company is required to appoint Key Managerial Personnel within six (6) months from 1st April 2014.

And the companies which fall into the category to appoint Key Managerial Personnel shall again appoint Key Managerial Personnel within six (6) months from the applicability of this section.


Restrictions on Appointment of Key Managerial Personnel


1. No company shall appoint or employ at the same time a Managing Director and a Manager.

2. No company shall appoint or re-appoint any person as to its Manager for a term exceeding five years at a time.

3. No re-appointment shall be made earlier than one year before the expiry of his term.

4. Whole-time key managerial personnel shall not hold office in more than one company except in its subsidiary company at the same time.

5. Key managerial personnel may become a director of any other company with the permission of the Board

6. In case of appointment of Managing Director or Whole-time Director, the term of appointment shall not exceed 5 years at a time.

7. If the office of any KMP is vacated, the resulting vacancy shall be fiin 6 months from the date of such vacancy

8. A whole-time KMP shall not hold office in more than one (1) company except in its subsidiary company at the same time.

9. With the permission of the Board of a company, KMP can act as a director of any other company

10. Managing Director can be appointed in more than one Company if he is the Managing Director or Manager of one, and not more than one, other company, bypassing a resolution at the Board meeting and obtaining the consent of all the directors present at the meeting.


The Key Managerial Personnel play an important role in the management of the day-to-day operations of the Company. Further, the Ministry of Corporate Affairs and the Securities Exchange Board of India has mandated certain companies to appoint the KMPs so that the companies operate in true letter and spirit of the law.

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