Section 196 — Appointment of managing director, whole-time director or manager

(1) No company shall
appoint or employ at the same time a managing director and a manager.
(2) No company shall appoint or re -appoint any person as its managing directo r, whole-time director
or manager for a term exceeding five years at a time:
Provided that no re-appointment shall be made earlier than one year before the expiry of his term.
(3) No company shall appoint or continue the employment of any person as managing director, whole-
time director or manager who —
(a) is below the age of twenty-one years or has attained the age of seventy years:
Provided that appointment of a person who has attained the age of seventy years may be made by
passing a special resolution in which case the explanatory statement annexed to the notice for such
motion shall indicate the justification for appointing such person;
1[Provided further that where no such special resolution is passed but votes cast in favour of the
motion exceed the votes, if any, cast against the motion and the Central Government is satisfied, on an
application made by the Board, that such appointment is most beneficial to the company, the
appointment of the person who has attained the age of seventy years may be made.]”;
(b) is an undischarged insolvent or has at any time been adjudged as an insolvent;
(c) has at any time suspended payment to his creditors or makes, or has at any time made, a
composition with them; or
(d) has at any time been convicted by a court of an offence and sentenced for a period of more than
six months.
(4) Subject to the provisions of section 197 and Schedule V, a managing director, whole-time director
or manager shall be appointed and the terms and conditions of such appointment and remuneration payable
be approved by the Board of Directors at a meeting which shall be subject to approval by a resolution at the
next general meeting of the company and by the Central Government in case such appointment is at variance
to the conditions 2[specified in Part I of that Schedule]:
Provided that a notice convening Board or general meeting for considering such appointment shall
include the terms and conditions of such appointment, remuneration payable and such other matters
including interest, of a director or directors in such appointments, if any:
Provided further that a return in the prescribed form shall be filed within sixty days of such appointment
with the Registrar.
(5) Subject to the provisions of this Act, where an appointment of a managing dire ctor, whole-time