Whole Time Director

Introductory note:
In the Geeta Saar 38th edition, we covered discussion on ‘Promoters’. In the 40th
edition, we had a discussion on ‘Directors’. The discussion in the 43rd edition was on
‘CEO & CFO’ and in the 44th edition, we had deliberated on the terms ‘Manager’ and
‘Managing Director’. In this edition, we present a discussion on ‘Whole-time Director’
u/s 2(94) and ‘Company Secretary’ u/s 2(24) of the Companies Act, 2013.
Whole-time Director [Sec 2(94)]

1. Meaning of the term ‘whole-time director’
“Whole-time Director” has been defined to include a director in the whole-time
employment of the company. The definition of ‘whole-time director’ is an
inclusive definition. A whole-time director refers to a director who has been in
employment of the company on a fulltime basis and is also entitled to receive
remuneration.
Section 269 of the Companies Act, 1956 contained the definition of the term
“whole-time director” appended as an explanation to section 269 which
corresponds to the definition under this Act.
A whole-time director is a director rendering his services on whole time basis to
the company. Further, a whole-time employee, when appointed as a director of
the company, will be occupying the position as the whole-time director. This
position is clarified by DCA vide letter no. 2/19/63- PR dated 29.06.1964 which
provided that a whole-time employee of a company also appointed as a director
of the company is in the position of whole-time director. The view is equally
applicable in the case of alternate director. Accordingly, the appointment of an
employee as an alternate director will be governed by the provisions of Section
314, 269, 309 and 198 of the Companies Act, 1956.
2. Position of a whole-time director
The position of a whole-time director is a position of significance under the Act. A
whole-time director is considered and recognised as a ‘key managerial
personnel’ in clause (51) of section 2 of the Act. Further, he is an officer in
default (as defined in clause (60) of section 2) for any violation or non-
compliance of the provisions of Act.
3. Appointment in other companies
For appointment of whole-time director, the provisions of section 196 read with
schedule V are required to be complied with. As the services are rendered whole-
time, logically, a director cannot be in whole-time employment in more than one
company. However, the Act does not prohibit a person who is already a whole-
time director of another company to be appointed as a director of another
company. When the whole-time director is a key managerial person under the
provisions of section 203, he may be appointed as a whole-time director in a
subsidiary company as provided in sub-section (3) of section 203.
© ICSI – Reproduction of any material / contents shall be only with prior permission of ICSI
4. Remuneration of whole-time director
The remuneration of the whole-time director is required to be paid after

complying with the provisions of section 197 and schedule V of the Companies
Act, 2013 and rules made thereunder.
Company Secretary or Secretary [Sec 2(24)]
1. Meaning of Company Secretary or Secretary
“Company Secretary” or “Secretary” means a company secretary as defined in

clause (c) of sub-section (1) of section 2 of the Company Secretaries Act, 1980
(56 of 1980) who is appointed by a company to perform the functions of a
company secretary under this Act;
Company Secretaries Act, 1980
As per provisions of clause (c) of sub-section (1) of section 2of the Company
Secretaries Act, 1980 “Company Secretary” means a person who is a member
of the Institute.
The role and responsibilities of ‘Company secretary’ are broadened in the Act.
The position of the company secretaries are includes both managerial and
administrative functions apart from the secretarial functions.
Rule 8 of Companies (Appointment and Remuneration of Managerial

personnel) Rules, 2014 that mandate every listed and other public company
having a paid up capital of Rs 10 Crores or more is required to have a Company
Secretary.
Rule 8A which was inserted to the Companies (Appointment and Remuneration

of Managerial personnel) Amendment Rules, 2014 w.e.f. 09.06.2014
mandates the appointment of whole time company secretary in the companies
not covered under rule 8 but having paid up share capital of Rs 5 Crores or
more.
Exemption to section 8 (Non-profit Company)
The Central Government in exercise of powers conferred by section 462 has

notified that clause (24) relating to the “Company Secretary “or “Secretary”
shall not apply to section 8 Company.
It is an exhaustive definition and it includes the words “company secretary’’

apart from the word ‘secretary’.
2. Secretary of Producer Company
581 X mandates that every Producer Company having an average annual

turnover exceeding five crore rupees in each of three consecutive financial
years shall appoint a whole-time secretary. Such person shall be a member of
the Institute of Company Secretaries of India.
3. Position of Company Secretary or Secretary global laws
As per United Kingdom (UK) laws, a Company secretary may be qualified by

virtue of examination and membership of the Institute of Chartered Secretaries
and Administrators (ICSA), Only a qualified person is entitled to be designated
as a ‘Chartered Secretary’.
In American and Canadian publicly listed corporations, a company secretary is

typically named a corporate secretary or secretary.
4. Position of Company secretary under the Act
A company secretary under the Act is included in the definition of key

managerial personnel. Apart from the functions specified under various
sections, section 205 contains the function of company secretary, which are as
follows:
a) To report to the Board about the compliance with the provisions of this
Act, Rules made hereunder and other laws applicable to the Company
b) To ensure that the company complies with the applicable secretarial
standards
c) To discharge such other duties as may be prescribed
Compliance Officer
A company secretary ensures that company complies with relevant legislation
and regulations, and keeps board members informed of their legal
responsibilities. Company secretary represents before the statutory and
regulatory authorities on behalf of the company for ensuring compliances
required under various laws. It is also his responsibility to act as a mediator
between company, director and shareholder. Company secretary is recognised
before various forums like NCLT and SAT.
5. Position of Company Secretary under Securities Exchange Board of India Act,
1992
According to sub-section (b) of section 15V of the Act “company secretary”

means a company secretary as defined in clause(c) of sub-section (1) of section
2 of the Company Secretaries Act, 1980 and who has obtained a certificate of
practice under sub-section (1) of section 6 of that Act.
SEBI recognizes the Company Secretary as the Compliance Officer and
authorizes Practising Company secretaries to issue various certificates under
its Regulations. Further, Practising Company Secretaries are also authorised to
certify compliance of conditions of corporate governance of listed companies.
As per the SEBI (LODR) Regulations, 2015, a Company Secretary is to act as

compliance officer of the company.
Contents of Geeta Saar, as extracted from ICSI Premier on Company Law, is as per
notified law as on 30th September, 2016.

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Introductory note:

Whole-time Director [Sec 2(94)]

The remuneration of the whole-time director is required to be paid after

Company Secretary or Secretary [Sec 2(24)]

1. Meaning of Company Secretary or Secretary

“Company Secretary” or “Secretary” means a company secretary as defined in

Company Secretaries Act, 1980

Rule 8 of Companies (Appointment and Remuneration of Managerial

Rule 8A which was inserted to the Companies (Appointment and Remuneration

Exemption to section 8 (Non-profit Company)

The Central Government in exercise of powers conferred by section 462 has

It is an exhaustive definition and it includes the words “company secretary’’

581 X mandates that every Producer Company having an average annual

3. Position of Company Secretary or Secretary global laws

As per United Kingdom (UK) laws, a Company secretary may be qualified by

In American and Canadian publicly listed corporations, a company secretary is

4. Position of Company secretary under the Act

A company secretary under the Act is included in the definition of key

According to sub-section (b) of section 15V of the Act “company secretary”

As per the SEBI (LODR) Regulations, 2015, a Company Secretary is to act as

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