Appointment of managing director, whole-time director or manager
Section 196 of the Companies Act, 2013 deals with appointment of managing director, whole-time director or manager. No company shall appoint or employ at the same time a managing director and a manager. The Act came into force on 01 Apr 2014.
(1) No company shall appoint or employ at the same time a managing director and a manager.
(2) No company shall appoint or re-appoint any person as its managing director, whole-time director or manager for a term exceeding five years at a time:
Provided that no re-appointment shall be made earlier than one year before the expiry of his term.
(3) No company shall appoint or continue the employment of any person as managing director, whole-time director or manager who --
(a) is below the age of twenty-one years or has attained the age of seventy years:
Provided that appointment of a person who has attained the age of seventy years may be made by passing a special resolution in which case the explanatory statement annexed to the notice for such motion shall indicate the justification for appointing such person;
1Provided further that where no such special resolution is passed but votes cast in favour of the motion exceed the votes, if any, cast against the motion and the Central Government is satisfied, on an application made by the Board, that such appointment is most beneficial to the company, the appointment of the person who has attained the age of seventy years may be made.]";
(b) is an undischarged insolvent or has at any time been adjudged as an insolvent;
(c) has at any time suspended payment to his creditors or makes, or has at any time made, a composition with them; or
(d) has at any time been convicted by a court of an offence and sentenced for a period of more than six months.
(4) Subject to the provisions of section 197 and Schedule V, a managing director, whole-time director or manager shall be appointed and the terms and conditions of such appointment and remuneration payable be approved by the Board of Directors at a meeting which shall be subject to approval by a resolution at the next general meeting of the company and by the Central Government in case such appointment is at variance to the conditions 2[specified in Part I of that Schedule]:
Provided that a notice convening Board or general meeting for considering such appointment shall include the terms and conditions of such appointment, remuneration payable and such other matters including interest, of a director or directors in such appointments, if any:
Provided further that a return in the prescribed form shall be filed within sixty days of such appointment with the Registrar.
(5) Subject to the provisions of this Act, where an appointment of a managing director, whole-time director or manager is not approved by the company at a general meeting, any act done by him before such approval shall not be deemed to be invalid.
Section 196, The Companies Act, 2013 (Act 18 of 2013).
Cross-references
Extracted from the operative text of the enactments themselves. Every destination below exists in our corpus.
This section refers to
Related judgements & precedents
These are some judgments that construed this section, and hold precedence value. They hold authority on how to read, interpret and use this section.
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Ashok Kumar v. Indian Public School Private Limited & Ors.
Court's Decision & Legal Precedent
Section 196 prohibits a company from having both a managing director and a manager, not both a managing director and a CEO; s.203’s KMP mandate similarly does not bar appointing a CEO alongside an MD. Interim relief may still preserve the MD’s office briefly pending arbitration without restraining majority shareholders from inducting a CEO.
On this section: Clarifies the MD/manager exclusivity under s.196 versus MD+CEO dual roles — a frequent teaching trap.
The holding above is the ratio decidendi as extracted from the judgment by eCourts India, reproduced unaltered — it is a rendering of the court's reasoning, not a substitute for its words. Read the order itself before relying on it.
Made under this section, and citing it
2 instruments state that it was made under this provision — the power to make it comes from here, so a change to any of them changes what this section requires in practice. Newest first.
Another 3 instruments name this provision in its title or its text without being made under it.
Questions about Section 196
What have the courts held on Section 196 of the Companies Act?
Ashok Kumar v. Indian Public School Private Limited & Ors. (05 Nov 2024) is the leading judgment on this section among those set out below: Clarifies the MD/manager exclusivity under s.196 versus MD+CEO dual roles — a frequent teaching trap.
How do I find court cases under Section 196 of the Companies Act?
In judgments and charge sheets this section is written several ways, and each form finds a different set of orders. These search the full text of every order eCourtsIndia holds, best matches first: Companies Act 196, section 196 Companies Act, section 196 of the Companies Act. Each opens the full list of orders on eCourtsIndia, where it can be narrowed by court, year and outcome. 1 reported judgment on this section is set out on this page, beginning with Ashok Kumar v. Indian Public School Private Limited & Ors. (05 Nov 2024).
What should I read with Section 196 of the Companies Act, and has it changed?
Its own text turns on section 197 (Overall maximum managerial remuneration and managerial remuneration in case of absence or inadequacy of profits), so none of them can safely be read on its own. 2 other provisions in this corpus refer back to it. The rules and notifications made under it are where it actually bites, and there are 2: most recently G.S.R. NO. 41(E) Companies Appointment and Remuneration of Managerial Personnel Amendment Rules 2023 dated 19.01.2023 (2023), then Chapter XIII- The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014. (2014).
When did Section 196 of the Companies Act come into force?
Section 196 of the Companies Act, cited as Companies Act 196, came into force on 01 Apr 2014, having been enacted on 29 Aug 2013. It is in force as at the date shown on this page.
Other sections of this Act
- 2. Definitions5089 words
- 143. Powers and duties of auditors and auditing standards1867 words
- 230. Power to compromise or make arrangements with creditors and members1432 words
- 232. Merger and amalgamation of companies1416 words
- 149. Company to have Board of Directors1403 words
- 217. Procedure, powers, etc., of inspectors1390 words
Source and method. Compiled from the enactments of Parliament and of the State legislatures as published on India Code, and republished together with commentary and other original matter under section 52(1)(q)(ii) of the Copyright Act, 1957. Structured, cross-referenced and maintained by eCourtsIndia. Text as in force on 14 Oct 2026. This page is not a substitute for legal advice.