1.
Introduction
In a
company, post of chief executive is of great importance. A chief executive is
the person who runs the management of the company in accordance with the
policies approved by the Directors of company.
In other words, chief executive has not only to work as director of company,
but has to run management of company. However, chief executive always remains
subjected to directions and policies of board of directors of company.
2.
Definition under sec. 2(1) (6)
Chief
executive in relation to a company means as individual who object to the
control and directions of the directors, is entrusted with the whole or
substantially the whole, of the powers of the management of the affairs of the
company and includes a director or any other person occupying the position of a
chief executive by whatever name called, and whether under a contract of
service or otherwise.
%2Bcopy.png "Chief Executive under company law")
3. Appointment of chief executive
A
company other than a company managed by a managing agent shall have a chief
executive of the company. The procedure of appointment of chief executive is
stated in section 198 of the company ordinance which is as under
a.
Person entitled to make appointment
The
directors are authorized to appoint chief executive of the company. They appoint
the chief executive immediately after the incorporation of the company.
b.
Appointment of first chief executive
The
director of the company may appoint any individual to be the first chief
executive of the company.
(i)
Time of making appointment
The
directors appoint the chief executive
(i)
From the date of
commencing the business of the company, or
(ii)
Within 15 days of
the incorporation of the company.
(ii)
Duration to hold office
The
office of a chief executive may fall vacant if the resigns from his office or
otherwise ceases to hold the office. In the absence of these matters, he has to
vacant his office in following two cases.
(i)
Before the first
annual general meeting, or
(ii)
If directors have
fixed any shorter period at the time of his appointment then he would cease to
held his office on termination of that period.
c.
Appointment of subsequent chief executive
The
directors may also appoint the subsequent chief executive of the company. The
person appointed as chief executive is either a elected director or a outsider.
(i)
Time for making appointment
The
directors of the company appoint subsequent chief executive
(i)
Within fifteen days of
the date of election of directors or
(ii)
When the office of chief
executive falls vacant
(ii)
Duration
The
subsequent chief executive holds his office for a period of 3 years.
(iii)
Re-appointment
The
chief executive is eligible for re-appointment.
4. Terms of appointment
The
term and conditions of appointment of a chief executive are determined by the
following two persons.
a.
Directors
The
directors of the company determine the terms and conditions of appointment of
chief executive in general meeting. They do not determine those terms and
conditions according to their own will but while doing so they are subject to
articles of association. They cannot determine those conditions by going out of
these articles. Those terms and conditions of appointment are determined in the
general meeting in accordance with the article of association.
b.
Company
Company
if desires, may determine the terms of appointment in the general meeting in
accordance with the article of association. The company is also bound to
respect the articles of association as the directors of the company are.
5.
Restrictions on appointment
A
person who is ineligible to become a director of a company under section 187
cannot be appointed or continue as the chief executive of any company.
6. Removal of chief executive
The
removal of chief executive is stated in section 202 of the ordinance. The
removal of the chief executive takes place easily and this has come into force
by the following two ways.
a.
By Directors
The
directors may remove the chief executive from his office by passing a
resolution with a majority of three fourths of their total numbers.
b.
By Company
The
company may remove the chief executive from his office. But for this purpose it
has to pass special resolution. The company may by passing special resolution
remove the chief executive from his office before the completion of his term.
Conclusion
I
say, I include that chief executive though retires after expiry of period of
three years from his appointment, ye he continues to hold his office and to
perform his functions until a new chief executive is appointed.
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