Difference Between Managing Director and Whole time Director (with Appointment, Rules and Comparison Chart) - Key Differences (2022)

Last updated on by Surbhi S

Do you guys know that only directors can be managing directors of the company, but any person with the requisite qualification can become a whole-time director of the company? There is always confusion regarding the roles and functions of the Managing Director and Whole-time Director.

Who are Directors?

As the name suggests, directors are the officers of the company who are appointed with an aim of directing and supervising the company’s affairs. According to the Companies Act, the term ‘Director’ refers to the one appointed to the company’s board. Section 149 of the company’s act, says that every company is required to have a board of directors comprised of directors.

Also Read: Difference Between Manager and Director

(Video) #25 SECTION 196 APPOINTMENT OF MANAGING DIRECTOR, WHOLE TIME DIRECTOR OR MANAGER || CA CS

Here, we present to you the differences between the managing director and whole-time director in this post.

Content: Managing Director Vs Whole Time Director

  1. Comparison Chart
  2. Definition
  3. Key Differences
  4. Appointment
  5. Rules of Appointment
  6. Term of Office
  7. Conclusion

Comparison Chart

Basis for ComparisonManaging DirectorWhole-time Director
MeaningA managing director refers to the officer of the company who represents the Board in routine activities.A whole-time director, who provides his/her full-time services to the company's management.
Powers of ManagementPossesses substantial powers of management, which are not of routine nature.Does not possess substantial powers of management.
AppointmentResolution is passed at the board meeting. Consent of the shareholders is not required.A special resolution is passed at the AGM. Except when the whole time director is appointed as a trustee for debenture holders.
Simultaneous Existence with managerManaging Director cannot exist simultaneously with the manager in any company.A Whole Time Director can be appointed simultaneously with the managing director and manager.
Holding appointments in a number of companiesCan be appointed as managing director in more than one company, but not more than two companies.Cannot be appointed as a whole-time director in more than one company, as he is the whole time employee of the company.

Definition of Managing Director

Managing Director (MD) is assigned with significant powers, relating to the management of the company’s affairs. He is subordinate to the company’s board of directors. He/She is typically the chief executive officer of the company.

To become the managing director of the company he has to be a director. To put it simply, only directors can be appointed as managing directors. If someone is to be appointed as a managing director he must be appointed as a director first and then managing director and so he will cease to be the managing director of the company, at the same moment if he ceases to be the director.

Further, the powers entrusted to the MD can be exercised under the supervision, control, and direction of the board.

A managing director has the power to perform administrative functions, of routine nature when the Board authorizes. This does not include:

(Video) Difference Between A Manager And A Director

  • Power of affixing company’s common seal in any document.
  • Drawing or endorsing cheque on the company’s account
  • Drawing or endorsing any negotiable instrument
  • Signing any share certificate
  • Directing registration of transfer of any share

In a nutshell, a managing director does not have the power to perform administrative functions, except when the Board of Directors authorizes it.

Points to be Noted

  1. The powers conferred to the managing director can be altered.
  2. The managing director can be removed from his office, in the same manner in which his appointment was done, regardless of the fact that his appointment was done with the approval of the central government.
  3. More than one managing director can be there in a company.
  4. The person who is appointed as an MD, should not be an MD or Manager of more than one other company.

Appointment of Managing Director

An MD is a director as a result of:

  • Articles of association of the company
  • Agreement with the company
  • Resolution passed by the company at AGM
  • Resolution passed by the Board of Directors

Also Read: Difference Between COO and CEO

Definition of Whole-time Director

Whole Time Director refers to a director who is in full-time employment with the company, i.e. he/she is the one who gives his whole or significantly whole working time to work for the company. To put simply, a whole-time director is an employee director of the company, who carries out substantial administrative functions.

  • The whole-time director is a virtual managing director, though he is not designated.
  • When the appointment of a director is made, to work like a technical director, legal director, finance director, or marketing director on a full-time basis.

An executive director of the company is an example of a whole-time director. There are a number of companies in which executive directors do not form part of the Board of Directors. They devote their full time and attention to the enterprise and its business affairs. And because they are already in full-time employment of the company, they cannot join another company as a whole-time director.

(Video) Chairman, MD, CEO, Directors में क्या अंतर है । Difference between MD, CEO and Chairman. full form

But here it is to be noted that they can join another company to hold the office of a non-executive director, provided the overall number of companies as prescribed.

Also Read: Difference Between Executive and Non-Executive Director

Key Differences Between Managing Director and Whole-time Director

As we have understood the meaning of the two terms, let us understand the difference between managing director and whole-time director:

  1. A Managing Director is the one who represents the Board in day-to-day management. On the other hand, a Whole-time Director is a director appointed under a special contract of employment as a full-time employee of the company.
  2. A managing director is an officer of the company who possesses substantial powers of management. As against, a whole-time director is an ordinary officer of the enterprise, who does not possess discretionary power to take policy decisions.
  3. For the appointment of a managing director, the resolution is passed at the board meeting, and the approval of shareholders is not necessary. As against, for the appointment of whole-time director special resolution is passed at the AGM. Except when the whole time director is appointed as a trustee for debenture holders.
  4. A company either employs a managing director or manager, at one time, whereas a company can employ a manager and whole-time director, at the same time.
  5. One person can become a managing director in two companies. As against, one can be in whole-time employment of the company in just one company at a time, so one cannot hold the position of whole-time director in more than one company.

Appointment of Directors

A company shall appoint a managing director and a whole-time director. The board is required to approve such appointments and remuneration payable to the MD and WD. However, if there are any variances as to the conditions mentioned in Schedule V of the Companies Act, the appointment and remuneration payable to them has to be approved by resolution in the succeeding general meeting.

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Rules regarding the appointment of directors

  • While a public limited company shall have a minimum number of 3 directors whereas a private company can have a minimum number of 2 directors, but in the case of one person company, there is only one director.
  • There can be a maximum of 15 directors. However, the appointment of more than 15 directors is also permissible but only after passing a special resolution.
  • Every company must contain a minimum of one director who resides in India for a total period of at least 182 days in the immediately preceding year.
  • Every publicly listed enterprise is required to have a minimum of one-third of the total number of directors as independent directors.

Term of Office

Appointment or Reappointment of any person as the company’s managing director, whole-time director, or manager for more than five years is prohibited, provided that no reappointment shall be made earlier than one year before his term expires.

Conclusion

When the managing director vacates office as a director, it may lead to the discontinuation of office as a managing director. This means that he can give is resignation as a managing director and still continue as a director of the company but vice versa is not possible.

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FAQs

What is the difference between managing director and whole time director? ›

The Managing Director represents the Board in the day-to-day activities of the company. The Whole-Time Director is a director who devotes his whole time to the working of a company.

What is the difference between director and managing director? ›

A managing director is usually the most senior management position within a company. These professionals oversee the directors of each department to ensure productivity.

What is a whole time director? ›

A whole-time director is a director rendering his services on whole time basis to the company. Further, a whole-time employee, when appointed as a director of the company, will be occupying the position as the whole-time director.

What is the difference between directing and managing? ›

Managers are more concerned with the former; their role is to manage their teams in such a way that their day-to-day activities support the company's goals. By contrast, directors actually help set those goals and develop the strategies that will be implemented to achieve them.

How many whole time director can be appointed in a company? ›

An individual cannot be a Whole Time Director in more than one company except in a subsidiary company at the same time. A person or an individual can be appointed as Managing Director (MD) of one other company provided the same is approved by a Board Resolution with joint consent.

How many managing director can be appointed in a company? ›

A private limited company can appoint or employ only one person as its Managing Director. Some of the major responsibilities of a Managing Director are : Exercise his duties with due and reasonable care, skill and diligence and exercise independent judgment.

What is the role of a managing director? ›

A Managing Director is a professional who provides inspiration, motivation, and guidance to leaders and managers in a company. They are in charge of directing the company's operations to make sure it achieves its objectives effectively and efficiently.

Who is called managing director? ›

They are senior-level managers in a company looking after its day-to-day operations. They oversee the functioning and performance of different departments. They obtain reports from the department managers and, in turn, report them to the Chief Executive Officer (CEO) and the board of directors.

Is appointment of managing director mandatory? ›

Although there is no compulsion legally to appoint a managing director / whole time director or manager under the provisions of the Companies Act 2013, the law also does not prohibit voluntary appointment of managing director / whole time director or manager by a private company for running the company and its ...

What are different types of directors? ›

Types of Directors
  • Residential Director. ...
  • Independent Director. ...
  • Small Shareholders Directors. ...
  • Women Director. ...
  • Additional Director. ...
  • Alternate Director. ...
  • Nominee Directors. ...
  • Executive Director.
1 Feb 2022

Can a whole time director appointment without remuneration? ›

However there is no provision is available in the Companies Act 2013 in relation to minimum remuneration payable to the whole time Director / Managing Director. So if any person wants to appoint as a Whole time Director in a company without remuneration there is no bar and he can continue with the same.

Who is higher than the managing director? ›

Hierarchy. The relationship between a managing director and a CEO may be either equal or hierarchical. In some cases, the same person undertakes both roles. The MD tends to be the more senior role, due to being legally defined, whereas in some places the CEO is the most senior executive on the board.

What are the 4 styles of directing? ›

Styles of Directing
  • The dictator.
  • The negotiator.
  • The creative artist.
  • The confrontationalist.

What is the difference between managing director and owner? ›

CEO manage the company or one or more business verticals. They report to the Managing Director or the Board of Directors of the company depending on the organisation structure of the company. The proprietor is an owner of the small business of this own.

What is the procedure for appointment of whole-time director? ›

Procedure to appoint a MD/WTD/Manager by Private Company
  1. Articles of Association must authorize the Board to appoint a MD/WTD and Manager, if not; alter the AOA of the company first.
  2. Hold a Board Meeting for consideration of appointment of MD/WTD or Manager and pass resolution for appointment.
14 Apr 2021

What conditions are fulfilled in appointing a whole-time director? ›

CONDITIONS TO BE FULFILLED FOR THE APPOINTMENT OF A MANAGING OR WHOLE-TIME DIRECTOR OR A MANAGER WITHOUT THE APPROVAL OF THE CENTRAL GOVERNMENT. he had not been detained for any period under the Conservation of Foreign Exchange and Prevention of Smuggling Activities Act, 1974 (52 of 1974):

What is the maximum age limit for whole-time director? ›

Section 196(3)(a) provides that, the age of MD/WTD/Manager should not be below 21 years & should not be 70 years or more. Further, it is also provided that, appointment of a person who has attained the age of 70 years shall be made by passing a Special Resolution (SR).

Can a person be MD in 2 companies? ›

(4) Notwithstanding anything contained in sub-sections (1) to (3), the Central Government may, by order, permit any person to be appointed as a managing director of more than two companies if the Central Government is satisfied that it is necessary that the companies should, for their proper working function as a ...

Can one company have two managing directors? ›

Unlike a managing director or whole-time director, a company cannot appoint more than one manager at a time. When a person is entrusted with either whole or substantially the whole of powers of the company, it is presumed that only one person can have the management of the whole or substantial powers.

Can a business have 2 managing directors? ›

Managing directors are sometimes also known as a Chief Executive Officer, or CEO. Essentially, they are the director who leads the activities of the other directors in the business. A company usually only has one managing director at a time.

Why is it called a managing director? ›

What is a managing director? A managing director is the highest-ranking professional outside of a company's C-suite. Professionals in this role typically have many years of experience managing companies and staff. Managing directors, while high-ranking, report to a CEO and take direct orders from them.

What are the qualifications of a managing directors? ›

Many managing directors have a bachelor's degree, a master's degree or a doctorate in business, business administration, management, economics, commerce, accounting or finance. They may also need to have technical proficiency and extensive work experience in their industry.

Who appoints a managing director? ›

Most commonly, directors are appointed by the shareholders at the Annual General Meeting (AGM), or in extreme circumstances, at an Extraordinary General Meeting (EGM). A resolution for the appointment is put to a vote, and passed if a majority of shares are voted in favour.

What is another name for managing director? ›

What is another word for managing director?
MDhead
chief executivedirector
supervisorchairman
chairwomancommander
captainfigurehead
63 more rows

What's another word for managing director? ›

Synonyms
  • district manager.
  • manageress.
  • managing director.
  • administrator.
  • decision maker.
  • manager.

Can managing director be appointed in board meeting? ›

Therefore, the appointment of a managing director or whole-time director or manager and the terms and conditions of such appointment and remuneration payable thereon must be first approved by the Board of directors at a meeting and then by an ordinary resolution passed at a general meeting of the company.

What are the reasons for appointment of directors? ›

Nominee directors will be appointed by third party authorities or the Government to tackle mismanagement and misconduct. The duties of directors are to act honestly, exercise reasonable care and skill while performing their duties on behalf of the organization.

What are the two types of director? ›

There are two types of director, executive and non-executive. There is no legal distinction made between executive and non-executive directors - the difference is that non-executive directors do not get involved in the day-to-day running of the business.

What are the three different types of powers of directors? ›

Power Exercised by Passing Resolution at Board Meetings

Thus, the board of directors can exercise the following powers, only by passing a resolution in the meetings of the board: Make calls on shareholders. Authorise the buyback of securities and shares. Issue securities and shares.

What are the different modes of appointment of directors of public company? ›

Modes of Appointment of Directors are listed below.
  • Appointment by Signatures to the Memorandum.
  • Appointment of Director by Central Government.
  • Appointment oy Company in the General Meeting.
  • Appointment of Directors by third party.
  • Appointment of Director by Proportional Representation.
  • Appointment by Board of Directors.
26 Feb 2022

What are the restrictions on appointment of directors? ›

A company can appoint maximum 15 fifteen directors. A company may appoint more than fifteen directors after passing a special resolution in general meeting and approval of Central Government is not required. A period of one year has been provided to enable the companies to comply with this requirement.

What is the difference between directors remuneration and directors salary? ›

10 min read. Directors' remuneration refers to compensation the company gives to its directors for the services rendered. This can be through fees, salary or by use of a company's assets. The remuneration paid to Directors is issued only on receiving approval from shareholders and the Board of Directors.

Which resolution is passed for appointment of whole time director? ›

File e-form MGT-14 for board resolution along with attachments with the Registrar of Companies regarding appointment or variation (if any) in terms of appointment of whole-time Director within thirty (30) days from passing of resolution.

What are the 3 main approaches to directing? ›

Three approaches to directing:!
  • The Literal Approach: The text is sacred, every word and bit of punctuation is. ...
  • Translation Approach: Tries to capture the spirit of the script. ...
  • Auteur (author) Approach: Sees the script as raw material for a performance, and. ...
  • Style- partnership with directors, actors, playwright!

What are the 2 different types of acting methods? ›

The four major types of acting techniques include Classical Acting, Stanislavski's Method, Method Acting, and Meisner Technique.

What are the five fundamentals of directing? ›

These chapters form an essential preparation for an in-depth examination of the five fundamentals of play directing that make up the core of the text: composition, picturization, movement, rhythm, and pantomimic dramatization.

What is the difference between MD and CEO of a company? ›

Corporate hierarchy

In some organisations, the managing director may be a member of the board of directors and may report business concerns to the chairperson of the board. The chief executive officer holds the topmost position in the organisation's hierarchy. Some CEOs may be the founders of the organisation.

What is the difference between manage and owner? ›

Managers are employees of a business. Owners are investors in a business.

What level is a managing director? ›

The managing director is a senior management position responsible for the daily operations of a business and is considered an executive. The role works at the highest level of strategic direction and decision-making within the company.

What title is higher than managing director? ›

Managing directors are primarily responsible for helping an organization grow, while executive directors are responsible for being a representative between the board and company and offering senior leadership.

Who is more powerful MD or director? ›

Unless specified, a director is an officer who is a member of the board of directors. A director is paid a fee for his expertise, and he is not an employee of the company unless he is an executive director. A Managing Director is the highest ranking officer in charge of management and administration.

Who is bigger than managing director? ›

CEO vs Managing Director Head-to-Head Differences

A CEO comes after the Board of Directors in the organizational structure. A Managing Director comes under the authority of the CEO. A Chief Executive Officer is not responsible for the organization's day-to-day affairs.

Is managing director top level? ›

A managing director is a senior-level manager in a company who is responsible for its day-to-day operations. They oversee the performance and functioning of the different company departments and receive reports from their department managers.

Who is known as managing director? ›

A managing director is the highest-ranking manager at an investment bank without becoming a group head or member of the C-suite. As some of the top leaders in the company, managing directors bring many years of business leadership and experience.

Who comes under managing director? ›

A Managing Director reports to the CEO on updates and concerns on the day-to-day business of the company. They might also report to the board. They are responsible for the smooth functioning of daily processes and manage the managers and other department heads in a company.

Can company have 2 managing directors? ›

Section 203 of the Companies Act 2013 depicts you cannot have two managing directors in a particular company. The Companies Act 2013 says that you cannot have two Managing Directors in a particular company. So, even after Private Limited Company Registration, a private company cannot appoint two MDs at the same time.

Is MD more senior than VP? ›

On Wall Street, managing directors are department or division heads. Senior vice presidents and vice presidents are on lower rungs of the corporate ladder. Anywhere else, except in Hollywood, the title director is a middle-management title, roughly equivalent to a vice president but lower than a senior vice president.

Can a MD be a chairman? ›

Section 203 of the Companies Act, 2013 provides that an individual shall not be appointed as the chairperson of a company as well as the MD/CEO at the same time unless the articles of such company provide otherwise or the company does not undertake multiple businesses.

Who is first director or managing director? ›

Prerequisite for the appointment of managing director is that he should be first appointed as a director of the company. However, a managing director cannot be equated with an ordinary director due to the extra powers vested in him.

What is difference between MD & CEO? ›

The MD is responsible for the overall management of an organisation. The CEO has the responsibility to facilitate business, and should also have a strategic vision to align the company, both internally and externally. A CEO has to guide the employees and the executive officers.

Who is lower than managing director? ›

Managing Directors ensure the business performance from heads and conduct meetings for improvement. Executive Director ranks below the managing directors if the MD or CEO is not available in the organization, then the executive director reserve the right to decide in favor of the organization.

What are the 4 levels of management? ›

What Are the Different Types of Managers? The four most common types of managers are top-level managers, middle managers, first-line managers, and team leaders. These roles vary not only in their day-to-day responsibilities, but also in their broader function in the organization and the types of employees they manage.

What are the 3 types of management? ›

There are three broad categories of management styles: Autocratic, democratic and laissez-faire. Within these categories, there are specific subtypes of management styles, each with its own pros and cons.

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