Dear Vinod Kothari jee, Section 196 (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 specified in that Schedule: Subject to the provisions of section 197 and schedule V, a managing director, whole time director or manager shall be appointed ……………….. The wordings of the section 196(4) --- “section 197 and Schedule V”, AND is a Conjunction and joining here words “Section 197” and “Schedule V”. Conjunctions are divided into two classes: Coordinating and Subordinating. The conjunction joining together the words, statements or clauses of equal rank is a called a coordinating conjunction. Coordinating means equal rank. Hence here Section 197 and Schedule V shall be read together and not in isolation. After the word “schedule V” punctuation [, - coma] has been used. The first coma actually dependent on the first part of the sentence and it gives an indication that use of expressions – Managing Director, whole time director or manager should be read in relation to section 197 and Schedule V only in this section. Section 196 (4) does not mention the word “company” as exclusively used in section 196 (1), (2) and (3) but mentioning the positions viz., - managing director, whole time director or manager. Hence one impression emerges --- since section 197 is applicable to public companies only, hence, private companies are outside the ambit of Schedule V. However, rest of the provisions of section 196 shall apply.
Posted on: Fri, 07 Nov 2014 12:00:20 +0000
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