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A public company’s board appoints a managing director who meets the conditions of Schedule V. Under section 196(4) of the Companies Act, 2013, how must the members approve the appointment?

Question and options

A public company’s board appoints a managing director who meets the conditions of Schedule V. Under section 196(4) of the Companies Act, 2013, how must the members approve the appointment?

  1. By a resolution at a general meeting within six months

  2. By a resolution at the next general meeting

  3. By a resolution passed by postal ballot within one month

  4. By a resolution at the next annual general meeting

Answer and explanation

Correct answer: B - By a resolution at the next general meeting

Section 196(4) of the Companies Act, 2013 provides that the appointment, terms and remuneration approved by the board are subject to approval by a resolution at the next general meeting of the company, whether annual or extraordinary. If the appointment is not in line with Schedule V, Central Government approval is also needed.

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