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CA Foundation · Business Laws · The Companies Act, 2013

Ravi Textiles Ltd, a listed public company, wants to appoint a person as its managing director. The person is 72 years old and has never held office in the company. Under the Companies Act, 2013, what is the position regarding the appointment?

A person aged 70 or more may be appointed managing director of a public company only with a special resolution of members, supported by an explanatory statement giving reasons. There is no absolute age bar, and a mere board resolution is not enough.

  1. AIt is not allowed, because no person above 70 years can ever be appointed as managing director
  2. BIt is allowed only if a special resolution is passed by the members and the explanatory statement states the reasonsCorrect
  3. CIt is allowed with a simple board resolution, as age is not relevant for a managing director
  4. DIt is allowed only if the person has previously served as a director for five years

Explanation

A person who is 70 years or older can be appointed as managing director, whole-time director or manager only if the members pass a special resolution and the explanatory statement justifies the appointment. A flat bar at 70 does not exist, so the first option is wrong. The board alone cannot approve it.

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