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CMA Intermediate · Business Laws and Ethics · Key Managerial Personnel

Rohit is the whole-time company secretary of Sagar Foods Ltd. He is also asked to hold office as whole-time company secretary in Sagar Foods' subsidiary and, separately, in an unrelated company, Meru Paints Ltd. Which statement is correct under Section 203(3)?

He can hold office in Sagar Foods and its subsidiary but not as whole-time KMP in the unrelated company. Section 203(3) prohibits holding office in more than one company at once, with the subsidiary company as the only exception.

  1. AHe may hold office in both, since a company secretary is exempt from the sub-section
  2. BHe may hold office in Sagar Foods and its subsidiary, but not as whole-time KMP in the unrelated Meru Paints Ltd.Correct
  3. CHe may hold office only in Meru Paints Ltd., not in the subsidiary
  4. DHe may hold office in any number of companies if the Registrar is informed

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 company. So the subsidiary is allowed, but the unrelated company is not. The proviso only lets him be a director of another company with Board permission, not a whole-time KMP.

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