3.4       Query

Approval of Central Government for appointment of whole-time directors and managing directors in case of amalgamation.

1. An independent private limited company having two managing directors and five whole-time directors amalgamated with a widely held public limited company. As per the provisions of the scheme of amalgamation sanctioned by the High Court all the existing managing directors and whole-time directors will become the managing directors and whole-time directors of the public limited company after amalgamation on the same terms and conditions.

2. The querist has sought the opinion of the Expert Advisory Committee whether, under the circumstances, the approval of Central Government under the provisions of Sections 269 and 309 of the Companies Act, 1956 is required by the company for appointment of managing directors and whole-time directors and payment of remuneration to them in the transferee company which is a public limited company? If it is required from which date it should be taken, i.e., from the date of amalgamation or from the date of expiry of last 5 years of appointment in the transferor company.

  Opinion2                                              November 15, 1988

1. The Committee is of the view that the amalgamated company is altogether a separate legal entity and, on merger, the merging company loses its identity.  

 

2. The Committee is, therefore, of the opinion that the permission of the Central Government would be required for the appointment of whole-time directors and managing directors in the amalgamated company, from the date of amalgamation.

The Expert Advisory Committee referred this query for the opinion of the Company Law Committee of the Institute. This opinion is, therefore, the opinion of the latter Committee.