Definition and types of manager

 Section 2(53) of the 2013 Act was explained the roles
and responsibilities of the manager and it is reproduce
section 2(24)of the(old)Companies Act, 1956.Three
conditions are to be satisfied before a person may
become a ‘manager‘ under section 2(24) of the 1956
Act. They are,
 he must be an individual as opposed to a firm or a
body corporate or an association,
 he must have the management of the whole or
substantially the whole of the affairs of the
company and,
 he must be subject to the superintendence, control and
direction of the Board of directors.
www.newbusinessregistration.in

 The definition of the word ‘Manager’ given in section
2(24) of the 1956 Act is very wide, and whatever be the
nomenclature employed by the parties, if large powers
of management of substantially the whole business of
the company are vested in a person, then that person
becomes the manager. It was held that a person who is
not in charge of entire business of the company cannot
be deemed to be the manager of the company. A
person entrusted with the business of the branch is not
a manager but merely an agent whose duties are
confined with certain prescribed limits and he cannot
have any control over the affairs of the company as a
whole. Also, it was held that where the articles provide
that a manager may be appointed and may be given
the ordinary powers of a manager, it is reasonable to
infer that a person allowed to act as manager was
given such powers.

 It may be noted that a company can have only
one manager under the 1956 Act(the position is the
same under the 2013 Act), through it may have more
than one managing or whole time director. Unlike a
managing director who is entrusted with only
substantial powers of management or himself under
the Act has the management of the whole or
substantially the whole of the affairs of the company. It
therefore follows that only one incumbent can have
management of the whole or substantially the whole of
the affairs of the company; If there are more than one
such person, neither can have the management of the
whole or substantially the whole of the affairs of
the company.

 However, where the president reports to the
managing director and is not subject to the
superintendence, control and direction of the
Board of the directors, in view of section 2(24) of
the 1956 Act(now section 2(53) of the 2013 Act)
which says that a managing director in order to be
a manager has to be subject to the
superintendence, control and direction of the
Board, there seems to be an escape route.
However, a chief executive officer or president,
reporting directly to the Board, and in charge of
whole or substantially the whole of the affairs of
the company, may well be construed as the
‘manager‘.

 Under section 384 of the 1956 Act, a firm, a body corporate
or an association cannot be appointed as a manager. It was
held that where substantially the whole of the business of
the company has been made over to a financing company,
the financing company could not be regarded as a manager
since it did not function subject to the superintendence,
control and direction of the Board of the
financed company and therefore there was no violation of
section 384. Section 196 of the 2013 Act dealing with
appointment of managing director and whole time director
does not specifically provide that no body corporate or firm
could be appointed as such. However, from the wording of
section 2(53) of the 2013 Act, it is apparent that only an
individual could be appointed as managing director or
whole time director.

 The person prosecuted under the Fire Precautions Act, 1971 was
the assistant general manager of the book shop. His primary duty
was to be the chief buyer and he had been given no managerial
training and none in matters of health, safely or fire precautions.
He was in charge of the shop while the general manager was
away on holiday when an inspector found serious breaches of the
fire certificate. He was charged on the basis that he was a
managing director. It was held that the intended scope of the Act
to fix with criminal liability only those who were in a position of
real authority and who were responsible for putting proper
procedures in place, namely the decision makers within
the company who had both the power and responsibility to decide
corporate policy and strategy, and since the person charged was
only responsible for day to day running of the bookshop rather
than enjoying any sort of governing rule relating to the affairs of
the company, the defence that he was not manager would have
succeeded if raised at the trial. The conviction was accordingly
quashed.

 Factory manager in charge of production not
concerned with the buying of raw materials or
the selling of finished products and not having
the control over the company’s
finances, would not be manager within the
meaning of section 2(24).

 The site manager of a
company as held to be not
a manager for the
purposes of the Control of
pollution Act,
1974(English). The person
who only be liable under
the Act if it could be
shown that he was a
decision maker within the
company having both the
powers and responsibility
to design corporate
strategy and policy.

 As regards the position of managers who is also director and that
of a managing director, through the officers are seemingly
indistinguishable, there is a difference due to the mode of
appointment of each. Whereas in the case of the manager who is
also appointed director, if for any reason his office of director is
vacated, the office of the manager held by him is not affected; in
the case of a managing director , if he ceases to be director for any
reason whatever, the office of ‘managing director’ also will cease
along with it. The very definition of managing director which
begins by saying that a ‘managing director is a director’ shows
that a person cannot be managing director without being director.
But can continue to be manager whether or not he holds the office
of director also. The subtle distinction managers will be of no
practical significance in most cases, as a manager who is also a
director is, as regards his functions, in no way different from a
managing director.

 Further, where a managing director is a whole time director
also, there is no difference between a whole time director and
the managing director, except that as per section 316 of the
1956 Act (now section 203 of the 2013 Act), a managing
director of one more company, while a whole-time director,
being a whole time employee, cannot be whole-time director,
being whole-time employee, cannot be whole-time director in
more than one company.
 A further distinction between the ‘managers’ and ‘managing
director’ is that while a manager by virtue of his office has the
management of the whole or substantially the whole of the
affairs of the company, a manager has to be entitled with such
powers of the management, as may be thought fit, for a
managing director or any other director has, as director, no
powers of management except when acting as one of the
Board; and if he is to have any power, it will have to be
delegated to him or conferred on by him by the memorandum
or articles or by an agreement or resolution of the Board or by
the company in general meeting. As per section 196(1) of the
2013 Act, there cannot be both the managers and managing
director at the same time in a company.

 The Supreme court was laid down that what matters is not that a
person is described as a manager but whether he is exercising
substantial powers of management. Thus it is not necessary that a he
should be in the employment of the company because an employee
may not be a manager and he need not to be an employee. In the
case of manager his power is natural and arises from the fact of his
appointment but in case of managing director it has to be specifically
entrusted to him by the Board of Directors or by the company. Thus,
where the Board of directors told the managing director that he
should confine himself to managing, that affairs of a single
subsidiary, this was held to be the direction binding on the
managing, do not include the power to purchase the liability of the
third person, and still less that of the company‘s own manager or his
partner in a private transaction of his own. It was held that where
substantially the whole of the business of a company had been
made over to be a financing company, such company could not be
regarded as a manager since it did not function subject to the
superintendence, control and direction of the Board of the
borrowing company. A person in charge of a branch of the business
registration and not the entire business is not himself.

 When the interests of the managing director do
not conflict with the interests of the company,
the court may allow him to appear in a court
and make representation in behalf of
the company notwithstanding the fact that he
does not hold a power of attorney as required
by order 3 of the code of civil procedure. A
managing director is vested with
representative capacity and persons dealing
with him in the ordinary course of business
registration are entitled to assume that he has
the necessary authority.

Definition and types of manager

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Definition and types of manager