How long can a managing director serve?
Section 196 of the Companies Act, 2013 caps a managing director's term at five years, bars appointment below 21 or at 70 without a special resolution, and requires Form MR-1 within 60 days.
In this guide
Section 196 bars a company from employing a managing director and a manager at the same time. A term cannot exceed five years, and reappointment cannot start earlier than one year before that term ends. The person must be at least 21. Appointment at 70 or above needs a special resolution, with the justification in the notice. The Board approves it at a meeting, the next general meeting confirms it, and Form MR-1 goes to the Registrar within 60 days.
Who does section 196 bar from office?
A manager, if the company already has a managing director, and four classes of person named in subsection (3). Section 196(1) of the Companies Act, 2013 says no company shall appoint or employ a managing director and a manager at the same time. Section 2(54) defines a managing director as a director entrusted with substantial powers of management by the articles, an agreement, a general-meeting resolution, or the Board. Routine acts, such as affixing the seal or signing a share certificate, are not substantial powers of management.
Section 196(3) then bars four classes of person from being appointed or continued as managing director, whole-time director or manager.
| Bar | What it covers |
|---|---|
| Age | Below 21, or 70 or above, unless the 70-year proviso is met |
| Insolvency | An undischarged insolvent, or a person who has at any time been adjudged insolvent |
| Creditors | A person who has suspended payment to creditors, or made a composition with them |
| Conviction | Convicted of an offence and sentenced for more than six months |
How long is a section 196 term?
Five years at a time, and not a day longer. Section 196(2) says no company shall appoint or reappoint a managing director, whole-time director or manager for a term exceeding five years at a time. No reappointment shall be made earlier than one year before the expiry of the term.
A term that ends on 31 March 2030 can be renewed from 1 April 2029. A resolution in March 2029 is early, even if the new term is still five years. The one-year window is counted back from expiry, not forward from the last appointment.
Section 196(2) does not apply to a government company, under G.S.R. 463(E) dated 5 June 2015. The notification of 13 June 2017 keeps that exemption only where the government company has not defaulted in filing financial statements under section 137 or the annual return under section 92.
What age limits does section 196 set?
Not below 21, and not 70 or above without a special resolution. Section 196(3)(a) bars appointment or continued employment of a person who is below 21 or who has attained 70. The first proviso allows a person who has attained 70 if the company passes a special resolution, and the explanatory statement annexed to the notice states the justification.
The second proviso covers a failed special resolution that still had more votes in favour than against. The Central Government may, on an application by the Board, allow the appointment if it is satisfied that the appointment is most beneficial to the company. A bare board resolution does not use either proviso.
How is a section 196 appointment approved?
Board first, then the next general meeting, and the Central Government if Schedule V is missed. Section 196(4) says the appointment, the terms, and the remuneration are approved by the Board at a meeting, subject to approval by a resolution at the next general meeting, and by the Central Government where the appointment is at variance with the conditions in Part I of Schedule V. Remuneration limits sit with section 197 and that Schedule. This section does not restate the rupee caps.
The notice of the Board meeting or the general meeting must include the terms, the remuneration, and the interest of any director in the appointment. Section 196(5) protects acts done before the general meeting refuses approval. Those acts are not invalid merely because the meeting later says no.
What if the general meeting says no?
The appointment does not continue. Acts already done are not unwound by section 196(5). The company still has to appoint someone the meeting will approve, or leave the office vacant. It cannot treat the rejected person as confirmed because he signed cheques in the meantime.
When is Form MR-1 due?
Within 60 days of the appointment. Section 196(4) requires a return in the prescribed form within sixty days, filed with the Registrar. Rule 3 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 names that return as Form MR-1, for a managing director, whole-time director or manager.
The 30 June 2016 amendment omitted the chief executive officer, the company secretary and the chief financial officer from that return. Do not file MR-1 for those three offices on the strength of an older reprint. The form itself was substituted by a notification dated 19 January 2023. The 60-day period did not move with the form.
Where is a section 196 change notified?
As an MCA notification or a rule amendment, not as a practice note. The government-company exemption from the five-year cap arrived as G.S.R. 463(E). Read section 196 against the current Form MR-1 instruction before you copy a 2014 checklist, and track the change on the MCA updates feed.
Practical checks
Common questions
Can we have a managing director and a manager together?
No. Section 196(1) says no company shall appoint or employ a managing director and a manager at the same time. A whole-time director is not a manager for that bar. The prohibition is the pair of managing director and manager, not managing director and whole-time director.
The term ends on 31 March 2030. When can we reappoint?
Not before 1 April 2029. Section 196(2) caps a term at five years at a time, and says no reappointment shall be made earlier than one year before the expiry of the term. A resolution passed in March 2029 for a term that ends on 31 March 2030 is too early.
Our candidate is 72. Is a board resolution enough?
No. Section 196(3)(a) bars appointment of a person who has attained 70, unless the company passes a special resolution and the explanatory statement gives the justification. If that special resolution is not passed, but votes in favour still exceed votes against, the Central Government may allow the appointment on a Board application if it is satisfied the appointment is most beneficial to the company.
A candidate was sentenced to four months. Does section 196 block him?
Not on the conviction limb. Section 196(3)(d) applies where the person has been convicted by a court of an offence and sentenced for a period of more than six months. A sentence of four months does not meet that test. The insolvency limbs in clauses (b) and (c) are separate, and a four-month sentence does not answer them.
The shareholders reject the appointment. Are earlier acts void?
No. Section 196(5) says that where the appointment is not approved at a general meeting, any act done by that person before the approval fails shall not be deemed invalid. The rejection stops the appointment going forward. It does not unwind what he did while the Board appointment was still awaiting the meeting.
Do we file Form MR-1 for the company secretary as well?
Not under the current rule. Rule 3 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 requires Form MR-1 within 60 days for a managing director, whole-time director or manager. The 30 June 2016 amendment omitted the chief executive officer, company secretary and chief financial officer from that return. A company secretary's appointment is not an MR-1 filing.
Does the five-year cap apply to a government company?
Not if the exemption holds. G.S.R. 463(E) dated 5 June 2015 says section 196(2) shall not apply to a government company. The 13 June 2017 notification limits that exemption to a government company that has not defaulted in filing financial statements under section 137 or the annual return under section 92. A defaulting government company is back on the five-year cap.
Publication method
How this guide was prepared
This guide is published by the Complied AI research desk. Its source list and stated position were checked against the official records shown below on 27 September 2026.
Automation, including AI, may assist research, drafting and structure. It does not replace the official record or amount to an independent professional review. Read our editorial standards and corrections policy.
Verification path
Official sources used
Keep reading
Related guides
- Law · MCAWhat duties does section 166 impose?Section 166 of the Companies Act, 2013 requires a director to follow the articles, avoid a conflict, and pay back any undue gain. A contravention is a fine of ₹1,00,000 to ₹5,00,000.
- Law · MCAWhat is the board quorum under section 174?Section 174 of the Companies Act, 2013 sets board quorum at one-third of total strength or two directors, whichever is higher. Video participation counts. A fraction rounds up to one.
- Law · MCAWho must get a secretarial audit?Who section 204 of the Companies Act, 2013 requires to annex a Form MR-3 secretarial audit report, the rule 9 thresholds of ₹50 crore, ₹250 crore and ₹100 crore, and the ₹2,00,000 penalty for default.