Roles of KMP

• Chief Executive Officer (CEO): The CEO is primarily responsible for the overall management and strategic direction of the company. They play a key role in driving growth and innovation.
• Managing Director: The Managing Director holds substantial authority over company operations and is involved in the strategic management of the organization. They are appointed based on the Articles of Association, agreements, or resolutions passed in a general meeting.
• Company Secretary: This individual ensures compliance with legal and regulatory requirements, facilitating efficient administration and acting as a liaison between the Board and stakeholders.
• Whole-Time Director: A Whole-Time Director is employed full-time by the company and engages in daily operational management.
• Chief Financial Officer (CFO): The CFO oversees the company’s financial health, managing cash flow, financial planning, and risk assessments.

Companies Required to Appoint KMP

Section 203 of the Act

Certain companies must appoint KMPs, including:

• Every Listed Company
• Public Companies with a paid-up share capital of ?10 crore or more
• Private Companies with a paid-up share capital of ?10 crore or more are required to appoint a whole-time Company Secretary

KMP Appointment Process

• KMPs are appointed through a board resolution that outlines the terms and conditions, including remuneration.
• A KMP cannot hold office in more than one company, except for its subsidiary.
• The Board must fill any KMP vacancies within six months

Restrictions on KMP Appointment

The Act outlines specific restrictions for appointing KMPs:

• Individuals who have attained the age of 70 years or are below 21 years
• Those convicted as insolvent or uncharged insolvents
• Individuals who have suspended payments to creditors
• Those convicted of an offence punishable with imprisonment for more than six months

Responsibilities of KMP

KMPs are responsible for significant decision-making and ensuring compliance with statutory requirements. Their key responsibilities include:

1. Disclosure of Interests: KMPs must disclose their interests in other companies and associations within 30 days of their appointment.
2. Securities Disclosure: As per Section 170, KMPs must disclose their holdings in the company or its subsidiaries in the Register.
3. Compliance: KMPs are liable for non-compliance with the Act's requirements, ensuring that the company adheres to all legal stipulations.

Penalties for Non-Appointment of KMP

Failure to appoint KMPs as required under the Act can result in significant penalties:

• A fine of ?5 lakh for the company
• ?50,000 for each director and KMP in default
• An additional penalty of ?1,000 per day (up to a maximum of ?5 lakh) for ongoing non-compliance