Skip to content

CMA Final · Corporate and Economic Laws · Board of Directors and Key Managerial Personnel

Under Section 203 of the Companies Act, 2013, which of the following is correct about a whole-time key managerial personnel holding office in more than one company?

A whole-time KMP cannot hold office in more than one company at the same time, except in its subsidiary company. Being a director of another company is allowed only with Board permission. Associate companies and unlisted companies are not exceptions under Section 203(3).

  1. AHe may hold office only in one company, except that he may hold office in its subsidiary company at the same timeCorrect
  2. BHe may hold office in any two companies without any condition
  3. CHe may hold office in any number of unlisted companies
  4. DHe may hold office in the holding company and any associate company

Explanation

Section 203(3) says a whole-time KMP shall not hold office in more than one company except in its subsidiary company at the same time. The provisos allow him to be a director of another company with Board permission, and allow a company to appoint as MD a person who is MD or manager of one other company only, with the conditions stated. None of the other options reflects the general rule, and associate companies are not an exception.

Did you get it right without looking?

One question tells you little. A timed set on Board of Directors and Key Managerial Personnel shows your real accuracy, how long you take and where you lose marks.

Practise Board of Directors and Key Managerial PersonnelFree diagnostic mock

More Board of Directors and Key Managerial Personnel questions