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CS Executive · Company Law and Practice · Key Managerial Personnel and their Remuneration

Arvind Rao is the whole-time Chief Financial Officer of Orion Pharma Ltd. He is also asked to hold office as whole-time CFO of Zenith Retail Ltd, which is not a subsidiary of Orion Pharma. Under Section 203(3), what is the position?

This is not permitted. A whole-time KMP cannot hold office in more than one company at the same time except in its subsidiary company. Zenith Retail is not a subsidiary of Orion Pharma, so Section 203(3) prohibits the dual appointment.

  1. APermitted, as KMP may hold office in any two companies
  2. BNot permitted, since a whole-time KMP cannot hold office in more than one company except its subsidiary companyCorrect
  3. CPermitted if members pass an ordinary resolution
  4. DPermitted if he informs the Registrar within thirty days

Explanation

Section 203(3) bars a whole-time KMP from holding office in more than one company at the same time, except in its subsidiary. Zenith is not a subsidiary and no exception applies to a CFO role. The two-company allowance applies only to appointment as managing director under the third proviso.

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