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

Ms. Iyer is the whole-time Company Secretary of Lotus Pharma Ltd. She is also asked to serve as whole-time Company Secretary of Lotus Pharma's subsidiary, Lotus Labs Ltd. Which statement is correct under Section 203?

Holding both offices is allowed because Section 203(3) permits a whole-time KMP to hold office in more than one company where the other company is its subsidiary. The general bar applies to unrelated companies, and no Central Government approval is needed.

  1. ANot allowed, since a whole-time KMP can never hold office in two companies
  2. BAllowed, since the other company is a subsidiary, which is an exception to the bar on holding office in more than one companyCorrect
  3. CAllowed only if all directors present at a Board meeting consent
  4. DAllowed only with prior approval of the Central Government

Explanation

Section 203(3) bars a whole-time KMP from holding office in more than one company except in its subsidiary company at the same time. Lotus Labs is a subsidiary, so the exception applies. The all-directors-consent rule relates to appointing a managing director who is MD or manager of another company, not this case.

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