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CMA Intermediate · Business Laws and Ethics · Key Managerial Personnel

The managing director of Sundaram Ltd resigns, and the office of a whole-time KMP falls vacant on 1 July. A shareholder argues that the vacancy may remain until the next AGM. Under Section 203, what is the correct position?

The Board must fill the vacancy at a Board meeting within six months from the date it arose. Section 203(4) places this duty on the Board, not the shareholders, and does not allow the vacancy to wait for an AGM or lapse because another KMP exists.

  1. AThe Board must fill the vacancy at a Board meeting within six months from the date of vacancyCorrect
  2. BThe shareholders must fill it at a general meeting within three months
  3. CThe Board must fill it within thirty days, failing which the Registrar appoints
  4. DThe vacancy need not be filled if another KMP exists

Explanation

Section 203(4) says a vacancy in the office of any whole-time KMP shall be filled by the Board at a Board meeting within six months from the date of the vacancy. It is a Board function, not a shareholder one, and the period is six months.

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