Question

Justify the following statement:

Indian companies prefer to appoint a M. D. than Manager.

Answer 1

(a) A director Who is appointed from amongst the directors as Chief Executive Officer and entrusted with the substantial powers of management is called the managing director. Manager means any individual appointed to manage whole or substantially whole affairs of the company. He works under the supervision, direction, and control of the Board of Directors. He need not be a director of the company. The managing director must be a director first and then a managing director. A company can have more than one managing director but have only one manager.

(b) The managing director is more related and he remains constantly in contact with the Board of directors. As like Managing Director, the manager does not have close contact with the Board of directors. He works as an employee of the company and the Board. The Act allows a company to have either a managing director or manager. Indian Companies prefer to appoint a managing director than a manager because the managing director works in dual capacities viz. as director and as managing director. He is able to influence the Board better than that manager does.