Filing of E-Form MR-1 for the Appointment of an Executive Director

The question at hand is whether it is necessary to file E-form MR-1 for the appointment of a Director who is designated solely as an Executive Director and not as a Managing Director, Whole Time Director, or Manager. To answer this, we need to carefully examine the relevant sections of the Companies Act, 2013, and related rules.

1. Relevant Legal Provisions

• Section 196, 197, and Schedule V of the Companies Act, 2013:

  • These sections govern the appointment and remuneration of managerial personnel, including Managing Directors, Whole Time Directors, and Managers.

• Rule 3 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014:

  • This rule mandates that a company must file a return of the appointment of a Managing Director, Whole Time Director, or Manager within sixty days of the appointment with the Registrar in Form No. MR-1.

• Section 2(51) of the Companies Act, 2013:

  • Defines "Key Managerial Personnel" (KMP) to include the Chief Executive Officer, Managing Director, Manager, Company Secretary, Whole Time Director, and Chief Financial Officer.

• Section 2(94) of the Companies Act, 2013:

  • Defines "Whole Time Director" as a director who is in full-time employment of the company.

• Section 2(k) of the Companies (Specification of Definitions Details) Rules, 2014:

  • Defines “Executive Director” as a Whole Time Director as per clause (94) of section 2 of the Act.

2. Analysis

• Synonymity of Executive Director and Whole Time Director:
  • Based on the definitions provided in Section 2(94) and Section 2(k), an Executive Director is considered synonymous with a Whole Time Director. This means that an Executive Director falls under the category of Key Managerial Personnel (KMP).
• Requirement to File E-Form MR-1:
  • Rule 3 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, clearly states that the appointment of a Whole Time Director (and by extension, an Executive Director) must be filed with the Registrar using Form No. MR-1 within sixty days of the appointment.
  • Therefore, even if the designation is solely as an Executive Director, filing E-form MR-1 is required to comply with the law.

3. Portal Considerations

• V2 vs. V3 Portal:
  • It has been noted that in the V2 Portal, filing MR-1 for an Executive Director was permitted. However, this option is not enabled in the V3 Portal.
  • Despite this technical limitation, the legal requirement to file E-form MR-1 remains unchanged. Companies may need to seek guidance from the Registrar of Companies or legal counsel to ensure compliance through alternative means in the V3 Portal.

4. Conclusion

• Filing E-form MR-1 is Mandatory:
  • In conclusion, given that an Executive Director is categorized as a Whole Time Director under the Companies Act, 2013, filing E-form MR-1 for their appointment is necessary. Companies must adhere to this filing requirement to remain in compliance with the law, regardless of portal limitations.

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