Hello Seniors, requesting your knowledge on the Company Law side. Please throw some light on these questions.
1. Can a person currently in U.S be the Chairman of a company in India (the person is employed in a high profile bank in NY)?
2. Does the Chairman need to hold the majority shares for being eligible for the post (Pvt. Ltd Company, India) ?
3. If a Director holds 80% of shares of a Pvt. Limited Company will he be liable for 80% of liabilities?
4. Will it be an odd measure to appoint someone as the 'Chairman and C.E.O', in a director board with a strength of 2 (or 3) members. I ask for normally we see it is M.D & C.E.O?
Thanks for your kind advice and time in advance.
From India, Chennai
41. Can a person currently in U.S be the Chairman of a company in India (the person is employed in a high profile bank in NY)?
2. Does the Chairman need to hold the majority shares for being eligible for the post (Pvt. Ltd Company, India) ?
3. If a Director holds 80% of shares of a Pvt. Limited Company will he be liable for 80% of liabilities?
4. Will it be an odd measure to appoint someone as the 'Chairman and C.E.O', in a director board with a strength of 2 (or 3) members. I ask for normally we see it is M.D & C.E.O?
Thanks for your kind advice and time in advance.
From India, Chennai
As far as the provisions of Companies Act, 1956 go, the replies are as follows:
1. Can a person currently in U.S be the Chairman of a company in India (the person is employed in a high profile bank in NY)?
Ans: Yes, a person currently in US can be a Chairman of the Company in India.
2. Does the Chairman need to hold the majority shares for being eligible for the post (Pvt. Ltd Company, India) ?
Ans: No, the Chairman need not hold the majority shares for being eligible for the post unless the Articles of Association of the Company have prescribed this condition.
3. If a Director holds 80% of shares of a Pvt. Limited Company will he be liable for 80% of liabilities?
Ans: No, in a Company limited by shares, the liability of the Director holding 80% shares shall be only liable to pay for the amount of shares he holds.
4. Will it be an odd measure to appoint someone as the 'Chairman and C.E.O', in a director board with a strength of 2 (or 3) members. I ask for normally we see it is M.D & C.E.O?
Ans: It will not be odd. However, a CEO needs to be a person available at the Company who can take care of the day to day affairs of the Company. As you said, the person being appointed as Chairman is in US, it will be advisable to appoint someone in India as the CEO.
I hope it answers your queries.
Thanks & Regards,
Avika
From India, New Delhi
1. Can a person currently in U.S be the Chairman of a company in India (the person is employed in a high profile bank in NY)?
Ans: Yes, a person currently in US can be a Chairman of the Company in India.
2. Does the Chairman need to hold the majority shares for being eligible for the post (Pvt. Ltd Company, India) ?
Ans: No, the Chairman need not hold the majority shares for being eligible for the post unless the Articles of Association of the Company have prescribed this condition.
3. If a Director holds 80% of shares of a Pvt. Limited Company will he be liable for 80% of liabilities?
Ans: No, in a Company limited by shares, the liability of the Director holding 80% shares shall be only liable to pay for the amount of shares he holds.
4. Will it be an odd measure to appoint someone as the 'Chairman and C.E.O', in a director board with a strength of 2 (or 3) members. I ask for normally we see it is M.D & C.E.O?
Ans: It will not be odd. However, a CEO needs to be a person available at the Company who can take care of the day to day affairs of the Company. As you said, the person being appointed as Chairman is in US, it will be advisable to appoint someone in India as the CEO.
I hope it answers your queries.
Thanks & Regards,
Avika
From India, New Delhi
Thank you very much Avika for giving exact and precise answers for my queries.
Need a little more clarity just to be sure and maybe you could throw some more light if I would put them in figures. As to the liability part, suppose a Director, holds 800 equity shares (of 1000 shares in total) in a company with 2 partners and the company becomes defaulters for a 10 lack loan eventually. Will the company be responsible for 10 lacks as a whole and the partners share 50% responsibility or the person holding the 80% shares is personally liable to answer for 80% of the amount. From your answer I understood that the Director would be liable to 80% of the defaulted amount corresponding to the number of shares he is holding. Am I right?
Thanks again for your time and concern.
From India, Chennai
Need a little more clarity just to be sure and maybe you could throw some more light if I would put them in figures. As to the liability part, suppose a Director, holds 800 equity shares (of 1000 shares in total) in a company with 2 partners and the company becomes defaulters for a 10 lack loan eventually. Will the company be responsible for 10 lacks as a whole and the partners share 50% responsibility or the person holding the 80% shares is personally liable to answer for 80% of the amount. From your answer I understood that the Director would be liable to 80% of the defaulted amount corresponding to the number of shares he is holding. Am I right?
Thanks again for your time and concern.
From India, Chennai
If it is a Company, the partners (Directors) can have a inter-se adjustment for liabilities.
In law, it is the Company who is liable to the outside party and Directors will not be personally liable unless they have given personal guarantees or are acting as Surety for the loan.
I hope this helps
From India, New Delhi
In law, it is the Company who is liable to the outside party and Directors will not be personally liable unless they have given personal guarantees or are acting as Surety for the loan.
I hope this helps
From India, New Delhi
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