In the era of technological advancement, wherein human beings are skilled in multitasking, a new concept has been evolved by the Companies Act, 2013 that paved the way for the inclusion of Key Managerial Personnel in the Section 2(51). It covers the traditional roles of not only Managing Director and whole time director, but also CEO, Company Secretary and several other officers.
The role of Key Managerial Personnel has been buffed up in order to bring advancement in its function. One of the noteworthy features of this concept is that it has brought crucial management roles on a single platform as a team rather than as independent individuals performing their duties separately. KMP may hold several positions such company secretary, managing director and CEO, etc.
Now, the question popped up before us is that who are ‘Key Managerial Personnel’? To know the concept of KMP we need to dwell in to the meaning of Key Personnel Manager. A Key Personnel Manager has a duty to control and direct the activities of an entity. The position they holds are Board of Directors, Chief Executive Officer and Chief Financial Officer, etc. They are entitled with a special position at which they have signing authority over the authentication papers of company and being heard in the Audit Committee. KMP is the most important person of a company as he plays a pivotal role in the success of any company.
Now coming to the other phase, Section 203 of the Companies Act, 2013 which deals with the Appointment Key Managerial Personnel requires that every Listed Company along with the every other public company having paid up capital of Rs 10 Crores or more requires having a Key Managerial Personnel. Every whole-time Key Managerial Personnel of a company shall be appointed by a means of Resolution of the Board. A Key Managerial Personnel can also hold a position of director in any company but with the permission of the Board. A person can only become KMP of two companies when he is in the company’s subsidiary company or as a Managing Director, only if he is the MD of two companies or in excess of that coupled with the approval of Board members at the Board meeting.
In order to enhance the growth of companies, there is a need of proper implementation of the Section 203 of the Companies Act, 2013. What seems more interesting is that even if a company is not required to have KMPs under Section 203, and if they appoint the MD, CEO, WTD, CFO and CS they automatically takes the route of Key Managerial Personnel. While concluding this concept, it is pertinent to note that every whole-time director (WTD) as well as the CEO will be treated as a KMP.