Section 190 of the Companies Act, 2013
Section 190 of the Companies Act, 2013 deals with the contract of employment with managing or whole-time director.
📜 Section 190 – Contract of Employment with Managing or Whole-time Director
This section ensures transparency and availability of terms and conditions of employment of a managing director, whole-time director, or manager.
🔹 Key Provisions:
Written Contract Required:
The terms and conditions of appointment of a managing director, whole-time director, or manager must be in writing.
Preservation and Inspection:
The company is required to:
Keep the contract at the registered office, and
Make it open for inspection by members of the company without any fee.
In Case of No Written Contract:
If the appointment is not made via a formal written contract, the company must prepare a written memorandum of the terms and conditions.
This memorandum should also be kept at the registered office and made available for inspection.
Penalty for Non-Compliance:
If the company fails to comply with this section:
The company shall be liable to a penalty of ₹25,000, and
Every officer in default shall be liable to a penalty of ₹5,000.
✅ Purpose:
To ensure that shareholders can verify the terms of appointment and compensation of key managerial personnel and hold the management accountable.
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