Dear Seniors,
Please let me know whether it is possible for a person who is an employee of an organization to be one of the Directors of a sister concern (a wing) of the same company at the same time.
Regards,
Gargi
From India, Kolkata
Acknowledge(0)
Amend(0)
Please let me know whether it is possible for a person who is an employee of an organization to be one of the Directors of a sister concern (a wing) of the same company at the same time.
Regards,
Gargi
From India, Kolkata
Acknowledge(0)Amend(0)
Hi,
It is possible. Many public (limited) and private limited companies have these practices. Usually, the senior-most executive, like the president, senior vice president, or CEO of a company, will be a director on the board of the smaller group company or a subsidiary of the parent company. His appointment will be governed by the processes under the Companies Act and as per the proceedings of the board. In many companies, the person will be on the board as a whole-time director as well.
Kind regards,
Dayanand L Guddin
From Singapore, Singapore
Acknowledge(0)Amend(0)
31It is possible. Many public (limited) and private limited companies have these practices. Usually, the senior-most executive, like the president, senior vice president, or CEO of a company, will be a director on the board of the smaller group company or a subsidiary of the parent company. His appointment will be governed by the processes under the Companies Act and as per the proceedings of the board. In many companies, the person will be on the board as a whole-time director as well.
Kind regards,
Dayanand L Guddin
From Singapore, Singapore
Acknowledge(0)Amend(0)
Dear Gargi ji,
Appointment of Directors is regulated by the Companies Act, and there is no provision in the Companies Act that restricts any employee from becoming a Director of their parent company, sister concern, associate company, or group company. There is no provision that a Director cannot be an employee of any parent company, sister concern, associate company, or group company.
This is not my area of expertise. Experts can provide comments or corrections if needed.
From India, Mumbai
Acknowledge(0)Amend(0)
Appointment of Directors is regulated by the Companies Act, and there is no provision in the Companies Act that restricts any employee from becoming a Director of their parent company, sister concern, associate company, or group company. There is no provision that a Director cannot be an employee of any parent company, sister concern, associate company, or group company.
This is not my area of expertise. Experts can provide comments or corrections if needed.
From India, Mumbai
Acknowledge(0)Amend(0)
Hi Gargi,
As far as I see it, the only note of caution in this scenario is whether the terms of employment of the company in which this person is employed restrict him from taking up any other job or office of remuneration. Generally, employment contracts prevent an employee from taking up any other full-time or part-time job or assignments elsewhere. If this is the case, management can give a specific no objection to the employee that the management is okay with him taking up a director role in the sister concern.
Regards,
Sreejith
From India, Bangalore
Acknowledge(0)Amend(0)
As far as I see it, the only note of caution in this scenario is whether the terms of employment of the company in which this person is employed restrict him from taking up any other job or office of remuneration. Generally, employment contracts prevent an employee from taking up any other full-time or part-time job or assignments elsewhere. If this is the case, management can give a specific no objection to the employee that the management is okay with him taking up a director role in the sister concern.
Regards,
Sreejith
From India, Bangalore
Acknowledge(0)Amend(0)
Dear Gargi,
Appointment of the directors is governed by the Companies Act of 1956. As such, there is no restriction on any person becoming a director in any company, even if he or she is currently employed. However, this provision applies only to directors who actively participate in board meetings and other related committee meetings as per their nomination.
In the case of an executive director (meaning a director involved in the day-to-day operations of a company), he/she cannot simultaneously be an employee of another company, apart from the one that has appointed him/her as an executive director. Therefore, it is essential to verify whether the individual appointed as a director holds an executive director position. If so, the appointment would be considered null and void. Conversely, if the appointment is in a professional category, it is fully acceptable under the law.
Regards,
Vinay Somani
From India, Alwar
Acknowledge(0)Amend(0)
Appointment of the directors is governed by the Companies Act of 1956. As such, there is no restriction on any person becoming a director in any company, even if he or she is currently employed. However, this provision applies only to directors who actively participate in board meetings and other related committee meetings as per their nomination.
In the case of an executive director (meaning a director involved in the day-to-day operations of a company), he/she cannot simultaneously be an employee of another company, apart from the one that has appointed him/her as an executive director. Therefore, it is essential to verify whether the individual appointed as a director holds an executive director position. If so, the appointment would be considered null and void. Conversely, if the appointment is in a professional category, it is fully acceptable under the law.
Regards,
Vinay Somani
From India, Alwar
Acknowledge(0)Amend(0)
Dear Keshav,
Please read Section 275 read with Section 277 and 278 of the Companies Act. (Refer to the book "Ramaiya on Companies Act" for better understanding of Company Law).
You may also check the ruling of the Bombay High Court, which will clarify aspects on the directorship of a person as a Whole-Time Director. The ruling was provided in the case named Ramaben A Thanawala v Jyoti Ltd (1957) 27 Comp Cas 105 (Bom).
Regards,
Vinay Somani
From India, Alwar
Acknowledge(0)Amend(0)
Please read Section 275 read with Section 277 and 278 of the Companies Act. (Refer to the book "Ramaiya on Companies Act" for better understanding of Company Law).
You may also check the ruling of the Bombay High Court, which will clarify aspects on the directorship of a person as a Whole-Time Director. The ruling was provided in the case named Ramaben A Thanawala v Jyoti Ltd (1957) 27 Comp Cas 105 (Bom).
Regards,
Vinay Somani
From India, Alwar
Acknowledge(0)Amend(0)
Dear Vinay ji,
Thank you very much for your reply, which helped me enhance my knowledge.
In fact, as I mentioned, the Companies Act is not my subject. Nonetheless, I have reviewed sections 275, 277, and 278 of the Companies Act. I have also studied the case law of Ramaben A Thanawala v Jyoti Ltd., which is quite old. Unfortunately, I could not refer to the book by Ramaiya on the Companies Act.
To address certain doubts in my mind, I would like to submit the following:
In response to the query, I stated that there is no provision in the Companies Act that restricts any employee from becoming a Director of their parent company, sister concern, associate company, or group company. There is no provision stating that a Director cannot be an employee of a parent company, sister concern, associate company, or group company.
However, the sections you mentioned deal with the restriction on any person holding the office of Director in more than 15 companies simultaneously. These sections do not address whether a Director can be an employee or whether an employed person can hold a Directorship in any company.
The Ramaben A Thanawala case pertains to the remuneration of Directors, which is not relevant to our current discussion. It's worth noting that this case is quite old, and there has been an amendment in the limit of Directors' remuneration, which could be a separate topic for discussion.
My intention in making the above submission is to share my views so that we can exchange knowledge and insights.
Thank you.
From India, Mumbai
Acknowledge(0)Amend(0)
Thank you very much for your reply, which helped me enhance my knowledge.
In fact, as I mentioned, the Companies Act is not my subject. Nonetheless, I have reviewed sections 275, 277, and 278 of the Companies Act. I have also studied the case law of Ramaben A Thanawala v Jyoti Ltd., which is quite old. Unfortunately, I could not refer to the book by Ramaiya on the Companies Act.
To address certain doubts in my mind, I would like to submit the following:
In response to the query, I stated that there is no provision in the Companies Act that restricts any employee from becoming a Director of their parent company, sister concern, associate company, or group company. There is no provision stating that a Director cannot be an employee of a parent company, sister concern, associate company, or group company.
However, the sections you mentioned deal with the restriction on any person holding the office of Director in more than 15 companies simultaneously. These sections do not address whether a Director can be an employee or whether an employed person can hold a Directorship in any company.
The Ramaben A Thanawala case pertains to the remuneration of Directors, which is not relevant to our current discussion. It's worth noting that this case is quite old, and there has been an amendment in the limit of Directors' remuneration, which could be a separate topic for discussion.
My intention in making the above submission is to share my views so that we can exchange knowledge and insights.
Thank you.
From India, Mumbai
Acknowledge(0)Amend(0)
Dear friends,
No doubt, individuals can be appointed as Directors, except when they are disqualified from holding such a position. Please read the attached document.
Similar to the appointment of Ministers and Politicians, the appointment of directors in a company is a straightforward process, as evident from the attached notes. This information is intended for general reading. For specific issues requiring examination and advice based on established cases, please contact us.
Regards.
From India, Bangalore
Acknowledge(0)Amend(0)
No doubt, individuals can be appointed as Directors, except when they are disqualified from holding such a position. Please read the attached document.
Similar to the appointment of Ministers and Politicians, the appointment of directors in a company is a straightforward process, as evident from the attached notes. This information is intended for general reading. For specific issues requiring examination and advice based on established cases, please contact us.
Regards.
From India, Bangalore
Acknowledge(0)Amend(0)
Dear Keshav,
Thank you for reading the case law and sections. I would like to clarify that those sections are to be read along with the commentary, which will not be available on the internet or in the bare act. Merely reading the section will not clarify all aspects. Furthermore, the case law I have quoted explains which remuneration can be accepted as WTD. To make it more specific, I am attaching the Essence of Ramaiya scanned document. It will provide a clear view on the above discussion.
Regards,
Vinay
From India, Alwar
Acknowledge(0)Amend(0)
Thank you for reading the case law and sections. I would like to clarify that those sections are to be read along with the commentary, which will not be available on the internet or in the bare act. Merely reading the section will not clarify all aspects. Furthermore, the case law I have quoted explains which remuneration can be accepted as WTD. To make it more specific, I am attaching the Essence of Ramaiya scanned document. It will provide a clear view on the above discussion.
Regards,
Vinay
From India, Alwar
Acknowledge(0)Amend(0)
Dear Vinay ji,
May I know under which provision the ED cannot be an employee elsewhere? To my knowledge, there is no such provision. I may be wrong. According to me, the ED is a whole-time director, and by virtue of his nature of responsibility, he cannot be employed elsewhere. Please correct me if I am wrong.
Thank you very much for your attachment supporting my comments. In fact, company law is not my subject, which I repeat here.
The right and specific answer to the querist would be: It is possible that a person who is an employee of an organization can be one of the Directors of a sister concern (a wing) of the same company at the same time, but not a whole-time Director or Managing Director.
From India, Mumbai
Acknowledge(0)Amend(0)
May I know under which provision the ED cannot be an employee elsewhere? To my knowledge, there is no such provision. I may be wrong. According to me, the ED is a whole-time director, and by virtue of his nature of responsibility, he cannot be employed elsewhere. Please correct me if I am wrong.
Thank you very much for your attachment supporting my comments. In fact, company law is not my subject, which I repeat here.
The right and specific answer to the querist would be: It is possible that a person who is an employee of an organization can be one of the Directors of a sister concern (a wing) of the same company at the same time, but not a whole-time Director or Managing Director.
From India, Mumbai
Acknowledge(0)Amend(0)
Dear friends, Some more notes on this issue is attached for your information.
From India, Bangalore
Acknowledge(0)Amend(0)
From India, Bangalore
Acknowledge(0)Amend(0)
Dear All,
We, a group of 33 people, joined the Govt. Transport Corporation by accepting the offer letter on 28.08.2011 and later signed the appointment letter on 12.10.2011 on a purely contractual basis with specific terms and conditions.
Upon joining, we were not required to sign any contract agreement on judicial E-stamp paper; it remained as an oral agreement for two and a half years.
Recently, the management has requested all of us, the contractual employees, to provide a contract agreement on Judicial E-stamp paper worth Rs. 50. The concerning issue is that the terms of the contract have been altered from the original terms stated in the offer and appointment letters. This change is unfavorable to us. In protest, all of us have declined to sign this modified contract agreement and have filed a case in the Central Administrative Tribunal.
In this situation, I would like clarification on the following points:
1. What is our job status since there is no formal contract agreement signed between us and the Corporation?
2. Are we bound by the rules and regulations of the Corporation in the absence of any formal contract agreement?
3. If one of us received a chargesheet a few months ago, is that chargesheet valid in the absence of a formal contract agreement?
4. If one of us secures a better job opportunity elsewhere, should they resign from this position properly?
5. In a specific case, one of us resigned by serving the notice period correctly, but the management did not accept the resignation. What should be the next step in this situation?
I kindly request your response to these questions as we are all at the early stages of our careers.
From India, Delhi
Acknowledge(0)Amend(0)
We, a group of 33 people, joined the Govt. Transport Corporation by accepting the offer letter on 28.08.2011 and later signed the appointment letter on 12.10.2011 on a purely contractual basis with specific terms and conditions.
Upon joining, we were not required to sign any contract agreement on judicial E-stamp paper; it remained as an oral agreement for two and a half years.
Recently, the management has requested all of us, the contractual employees, to provide a contract agreement on Judicial E-stamp paper worth Rs. 50. The concerning issue is that the terms of the contract have been altered from the original terms stated in the offer and appointment letters. This change is unfavorable to us. In protest, all of us have declined to sign this modified contract agreement and have filed a case in the Central Administrative Tribunal.
In this situation, I would like clarification on the following points:
1. What is our job status since there is no formal contract agreement signed between us and the Corporation?
2. Are we bound by the rules and regulations of the Corporation in the absence of any formal contract agreement?
3. If one of us received a chargesheet a few months ago, is that chargesheet valid in the absence of a formal contract agreement?
4. If one of us secures a better job opportunity elsewhere, should they resign from this position properly?
5. In a specific case, one of us resigned by serving the notice period correctly, but the management did not accept the resignation. What should be the next step in this situation?
I kindly request your response to these questions as we are all at the early stages of our careers.
From India, Delhi
Acknowledge(0)Amend(0)CiteHR is an AI-augmented HR knowledge and collaboration platform, enabling HR professionals to solve real-world challenges, validate decisions, and stay ahead through collective intelligence and machine-enhanced guidance. Join Our Platform.
Maharashtra Shops And Establishments (Regulation Of Employment And Conditions Of Service) Act, 2.pdf
Industrial Employment Standing Oder Act.doc