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Definition and types of manager

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Title: Definition and types of manager


1
Definition and Types of Manager
2
Meaning of the term Manager
  • Section 2(53) of the 2013 Act was explained the
    roles and responsibilities of the manager and it
    is reproduce section 2(24)of the(old)Companies
    Act, 1956.Three conditions are to be satisfied
    before a person may become a manager under
    section 2(24) of the 1956 Act. They are,
  • he must be an individual as opposed to a firm or
    a body corporate or an association,
  • he must have the management of the whole or
    substantially the whole of the affairs of the
    company and,
  • he must be subject to the superintendence,
    control and direction of the Board of directors.

3
Business Registration
4
  • The definition of the word Manager given in
    section 2(24) of the 1956 Act is very wide, and
    whatever be the nomenclature employed by the
    parties, if large powers of management of
    substantially the whole business of the
    company are vested in a person, then that person
    becomes the manager. It was held that a person
    who is not in charge of entire business of the
    company cannot be deemed to be the manager of
    the company. A person entrusted with the
    business of the branch is not a manager but
    merely an agent whose duties are confined with
    certain prescribed limits and he cannot have any
    control over the affairs of the company as a
    whole. Also, it was held that where the articles
    provide that a manager may be appointed and may
    be given the ordinary powers of a manager, it is
    reasonable to infer that a person allowed to act
    as manager was given such powers.

5
Only one Manager
  • It may be noted that a company can have only
    one manager under the 1956 Act(the position is
    the same under the 2013 Act), through it may have
    more than one managing or whole time director.
    Unlike a managing director who is entrusted with
    only substantial powers of management or himself
    under the Act has the management of the whole or
    substantially the whole of the affairs of
    the company. It therefore follows that only one
    incumbent can have management of the whole or
    substantially the whole of the affairs of
    the company If there are more than one such
    person, neither can have the management of the
    whole or substantially the whole of the affairs
    of the company.

6
Business Registration
7
President -when not Manager
  • However, where the president reports to the
    managing director and is not subject to the
    superintendence, control and direction of the
    Board of the directors, in view of section 2(24)
    of the 1956 Act(now section 2(53) of the  2013
    Act) which says that a managing director  in
    order to be a manager has to be subject to the
    superintendence, control and direction of the
    Board, there seems to be an escape route.
    However, a chief executive officer or president,
    reporting directly to the Board, and  in charge
    of whole or substantially the whole of the
    affairs of the company, may well be construed as
    the manager.

8
Body corporate cannot be manager
  • Under section 384 of the 1956 Act, a firm, a body
    corporate or an association cannot be appointed
    as a manager. It was held that where
    substantially the whole of the business of the
    company has been made over to a financing
    company, the financing company could not be
    regarded as a manager since it did not function
    subject to the superintendence, control and
    direction of the Board of the financed company and
    therefore there was no violation of section 384.
    Section 196 of the 2013 Act dealing with
    appointment of managing director and whole time
    director does not specifically provide that no
    body corporate or firm could be appointed as
    such. However, from the wording of section 2(53)
    of the 2013 Act, it is apparent that only an
    individual could be appointed as managing
    director or whole time director.

9
Business Registration
10
Shop manager is not manager under the Act
  • The person prosecuted under the Fire Precautions
    Act, 1971 was the assistant general manager of
    the book shop. His primary duty was to be the
    chief buyer and he had been given no managerial
    training and none in matters of health, safely or
    fire precautions. He was in charge of the shop
    while the general manager was away on holiday
    when an inspector found serious breaches of the
    fire certificate. He was charged on the basis
    that he was a managing director. It was held that
    the intended scope of the Act to fix with
    criminal liability only those who were in a
    position of real authority and who were
    responsible for putting proper procedures in
    place, namely the decision makers within
    the company who had both the power and
    responsibility to decide corporate policy and
    strategy, and since the person charged was only
    responsible for day to day running of the
    bookshop rather than enjoying any sort of
    governing rule relating to the affairs of the
    company, the defence that he was not manager
    would have succeeded if raised at the trial. The
    conviction was accordingly quashed.

11
Factory manager is not manager under the Act
Departments view
  • Factory manager in charge of production not
    concerned with the buying of raw materials or the
    selling of finished products and not having the
    control over the companys finances, would not be
    manager within the meaning of section 2(24).

12
Site manager
  • The site manager of a company as held to be not
    a manager for the purposes of the Control of
    pollution Act, 1974(English). The person who only
    be liable under the Act if it could be shown that
    he was a decision maker within the company having
    both the powers and responsibility to design
    corporate strategy and policy.

13
Manager and  Managing Director
  • As regards the position of managers who is also
    director and that of a managing director, through
    the officers are seemingly indistinguishable,
    there is a difference due to the mode of
    appointment of each. Whereas in the case of
    the manager who is also appointed director, if
    for any reason his office of director is vacated,
    the office of the manager held by him is not
    affected in the case of a managing director , if
    he ceases to be director for any reason whatever,
    the office of managing director also will cease
    along with it. The very definition of managing
    director which begins by saying that a managing
    director is a director shows that a person
    cannot be managing director without being
    director. But  can continue to be manager whether
    or not he holds the office of director also. The
    subtle distinction managers will be of no
    practical significance in most cases, as a
    manager who is also a director is, as regards his
    functions, in no way different from a managing
    director. 

14
  • Further, where a managing director is a whole
    time director also, there is no difference
    between a whole time director and the managing
    director, except that as per section 316 of the
    1956 Act (now section 203 of the 2013 Act), a
    managing director of one more company, while a
    whole-time director, being a whole time employee,
    cannot be whole-time director, being whole-time
    employee, cannot be whole-time director in more
    than one company.
  • A further distinction between the  managers and
    managing director is that while a manager by
    virtue of his office has the management of the
    whole or substantially the whole of the affairs
    of the company, a manager has to be entitled with
    such powers of the management, as may be thought
    fit, for a managing director or any other
    director has, as director, no powers of
    management except when acting as one of the
    Board and if he is to have any power, it will
    have to be delegated to him or conferred on by
    him by the memorandum or articles or by an
    agreement or resolution of the Board or by
    the company in general meeting. As per section
    196(1) of the 2013 Act, there cannot be both the
    managers and managing director at the same time
    in a company.

15
Management of the whole and substantially whole
  • The Supreme court was laid down that what matters
    is not that a person is described as a manager
    but whether he is exercising substantial powers
    of management. Thus it is not necessary that a he
    should be in the employment of the company because
    an employee may not be a manager and he need not
    to be an employee. In the case of manager his
    power is natural and arises from the fact of his
    appointment but in case of managing director it
    has to be specifically entrusted to him by the
    Board of Directors or by the company. Thus, where
    the Board of directors told the managing director
    that he should confine himself to managing, that
    affairs of a single subsidiary, this was held to
    be the direction binding on the managing, do not
    include the power to purchase the liability of
    the third person, and still less that of
    the companys own manager or his partner in a
    private transaction of his own. It was held that
    where substantially the whole of the business of
    a company had been made over to be a financing
    company, such company could not be regarded as a
    manager since it did not function subject to the
    superintendence, control and direction of the
    Board of the borrowing company. A person in
    charge of a branch of the business
    registration and not the entire business is not
    himself.

16
Business Registration
17
Representative Capacity of Manager, Managing
Director
  • When the interests of the managing director do
    not conflict with the interests of the company,
    the court may allow him to appear in a court and
    make representation in behalf of
    the company notwithstanding the fact that he does
    not hold a power of attorney as required by order
    3 of the code of civil procedure. A managing
    director is vested with representative capacity
    and persons dealing with him in the ordinary
    course of business registration are entitled to
    assume that he has the necessary authority.
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