ROC COIMBATORE PENALISES A COMPANY FOR APPOINTING MANAGING DIRECTOR BEYOND 5 YEARS ROC, COIMBATORE VS SRI RAGAVENDHRA NEURO CARE PRIVATE LIMITED

 ROC COIMBATORE PENALISES A COMPANY FOR APPOINTING MANAGING DIRECTOR BEYOND 5 YEARS

ROC, COIMBATORE VS SRI RAGAVENDHRA

 NEURO CARE PRIVATE LIMITED

VIOLATION OF SECTION 196 OF THE COMPANIES ACT, 2013.

A recent action by ROC Coimbatore serves as a reminder that Managing Directors cannot be appointed for a term exceeding 5 years under Section 196 of the Companies Act, 2013.

WHAT HAPPENED?

Sri Ragavendhra Neuro Care Pvt Ltd appointed its Managing Director for a tenure longer than the permissible 5-year term.

As per agreement, company had re-appointed Shri R. Natarajan as MD for a period of 10 years (from 15.06.2011 to 10.06.2021).

The ROC, during scrutiny of filings, found this to be a clear violation.

WHY IS THIS NON-COMPLIANT?

Section 196(4)/(5) expressly restricts MD/Whole-time Director tenure to maximum 5 years.

Even a special resolution cannot override this statutory limit.

Only reappointment (within 1 year before expiry) is allowed — not an extended first term.

REGULATORY ACTION

Appointment beyond 5 years treated as invalid to the excess extent.

Penalties imposed on the company and officers under Section 450 (general penalty).

ROC Coimbatore imposed a penalty of ₹2 Lakh on the Company and ₹50K on the Director for Violation.

Company required to rectify filings and ensure proper tenure compliance.

KEY TAKEAWAYS FOR COMPANIES IN THIS CASE

✔ Maximum MD tenure = 5 years — no exceptions.

✔ Reappointment permitted but not earlier than 1 year before expiry.

✔ Form MR-1 must reflect accurate tenure.

✔ Non-compliance → penal consequences for both company and officers.

COMPLIANCE REMINDER

Review all MD/Whole-time Director appointment resolutions & filings to ensure they comply with the statutory 5-year limit.

PREVENTIVE COMPLIANCE TODAY AVOIDS REGULATORY TROUBLE TOMORROW.

R V SECKAR , FCS , LLB 79047 19295