Section 196 of Companies Act 2013: Appointment of Managing Director, Whole-Time Director or Manager
Updated: 17 September 2026
Section 196 of the Companies Act, 2013 regulates the appointment and re-appointment of a managing director, whole-time director or manager. It deals with simultaneous appointments, maximum tenure, age and other disqualifications, Board and general meeting approval, Schedule V compliance and the filing of the prescribed return with the Registrar.
Meaning of managing director, whole-time director and manager
Manager: Section 2(53) broadly describes a manager as an individual who, subject to the superintendence, control and direction of the Board, manages the whole or substantially the whole of the affairs of a company.
Managing director: Under Section 2(54), a managing director is a director entrusted with substantial powers of management by the articles, an agreement, a general meeting resolution or a Board resolution, and includes a director occupying that position by whatever name called.
Whole-time director: Section 2(94) treats a whole-time director as a director in the whole-time employment of the company.
Key requirements under Section 196
| Requirement | Position under Section 196 |
|---|---|
| Managing director and manager together | A company cannot appoint or employ a managing director and a manager at the same time. |
| Maximum term | Appointment or re-appointment cannot exceed five years at a time. |
| Timing of re-appointment | Re-appointment cannot be made earlier than one year before expiry of the existing term. |
| Minimum age | The appointee must not be below 21 years. |
| Age 70 or above | Appointment may be made by special resolution with justification in the explanatory statement. The Act also provides a route involving Central Government satisfaction where the special resolution is not passed but the statutory voting condition is met. |
| Other disqualifications | The section covers insolvency, suspension or composition with creditors, and specified conviction and sentence. |
| Corporate approvals | Board approval at a meeting is required, followed by approval by resolution at the next general meeting, subject to Section 197 and Schedule V. |
| Registrar filing | The prescribed return must be filed within 60 days of appointment. MCA uses webform MR-1 for the return of appointment of managerial personnel. |
Section 196 explained clause by clause
Section 196(1): Managing director and manager cannot coexist
A company cannot appoint or employ a managing director and a manager simultaneously. This restriction concerns the two offices specifically identified in subsection (1).
Section 196(2): Five-year maximum term
A managing director, whole-time director or manager may be appointed or re-appointed for a term not exceeding five years at a time. A re-appointment cannot be made earlier than one year before the existing term expires.
Section 196(3): Eligibility and disqualifications
A company cannot appoint or continue a person in these managerial positions if the person is below 21 years, subject to the statutory provisions applicable to a person who has attained 70 years, or if the person falls within the insolvency, creditor-composition or conviction-related disqualifications stated in the section.
For a person who has attained 70 years, the normal statutory route is a special resolution. The explanatory statement accompanying the notice must state the justification for the appointment. The second proviso, inserted with effect from 12 September 2018, also addresses the situation where the special resolution is not passed but votes in favour exceed votes against and the Central Government, on a Board application, is satisfied that the appointment is most beneficial to the company.
Section 196(4): Board, general meeting, Schedule V and filing
The appointment, terms and conditions and remuneration must be approved by the Board of Directors at a meeting and are subject to approval by resolution at the next general meeting. Section 196(4) operates subject to Section 197 and Schedule V. Where the appointment is at variance with the conditions specified in Part I of Schedule V, the statutory Central Government approval requirement applies.
The notice convening the relevant Board or general meeting must disclose the terms and conditions, remuneration and other prescribed matters, including the interest of directors in the appointment, if any. The prescribed return must be filed with the Registrar within 60 days of appointment.
Section 196(5): Acts before general meeting approval
If the appointment is not approved by the company at a general meeting, acts done by the appointee before that non-approval are not invalid merely for that reason, subject to the other provisions of the Act.
Practical procedure for appointment
A company should first verify eligibility under Section 196 and Part I of Schedule V and determine the proposed tenure, terms and remuneration. The Board should then consider and approve the appointment at a duly convened Board meeting. The company should place the appointment for the required approval at the next general meeting, with the notice containing the statutory disclosures. Where the appointee has attained 70 years, the special-resolution requirements and explanatory justification should be addressed unless the alternative statutory route is being invoked.
After appointment, the company should complete the applicable Registrar filings. MCA's current MR-1 instruction kit states that webform MR-1 is used for appointment of managerial personnel such as a manager, managing director or whole-time director and is to be filed within 60 days of appointment. Other filings may also be applicable depending on the resolution and appointment.
Related provisions and official resources
For the current statutory text and filing requirements, refer to the official resources below. Section 196 forms part of Chapter XIII of the Companies Act, 2013 and should be read with the definitions in Section 2, managerial remuneration provisions in Section 197 and Schedule V.
Ministry of Corporate Affairs - Companies Act, 2013
India Code - Central Acts and statutory materials
MCA - Instruction Kit for webform MR-1
This article is a general explanation of Section 196 and is not a substitute for professional advice on a specific appointment or remuneration structure.