1. Every company belonging to such class or classes of companies as may be prescribed shall have the following whole-time key managerial personnel,
i. managing director, or Chief Executive Officer or manager and in their absence, a whole-time director;
ii. company secretary; and
iii. Chief Financial Officer :
Provided that: an individual shall not be appointed or reappointed as the chairperson of the company, in pursuance of the articles of the company, as well as the managing director or Chief Executive Officer of the company at the same time after the date of commencement of this Act unless,
a. the articles of such a company provide otherwise; or
b. the company does not carry multiple businesses:
Provided further that: nothing contained in the first proviso shall apply to such class of companies engaged in multiple businesses and which has appointed one or more Chief Executive Officers for each such business as may be notified by the Central Government.
2. Every whole-time key managerial personnel of a company shall be appointed by means of a resolution of the Board containing the terms and conditions of the appointment including the remuneration.
3. A whole-time key managerial personnel shall not hold office in more than one company except in its subsidiary company at the same time:
Provided that: nothing contained in this sub-section shall disentitle a key managerial personnel from being a director of any company with the permission of the Board:
Provided further that: whole-time key managerial personnel holding office in more than one company at the same time on the date of commencement of this Act, shall, within a period of six months from such commencement, choose one company, in which he wishes to continue to hold the office of key managerial personnel:
Provided also that a company may appoint or employ a person as its managing director, if he is the managing director or manager of one, and of not more than one, other company and such appointment or employment is made or approved by a resolution passed at a meeting of the Board with the consent of all the directors present at the meeting and of which meeting, and of the resolution to be moved thereat, specific notice has been given to all the directors then in India.
4. If the office of any whole-time key managerial personnel is vacated, the resulting vacancy shall be filled-up by the Board at a meeting of the Board within a period of six months from the date of such vacancy.
5. If a company contravenes the provisions of this section, the company shall be punishable with fine which shall not be less than one lakh rupees but which may extend to five lakh rupees and every director and key managerial personnel of the company who is in default shall be punishable with fine which may extend to fifty thousand rupees and where the contravention is a continuing one, with a further fine which may extend to one thousand rupees for every day after the first during which the contravention continues.
Legal Commentary & Landmark Judgments: Section 203
Section 203 mandates the appointment of whole-time Key Managerial Personnel (KMP)—including Managing Director/CEO, Company Secretary, and Chief Financial Officer—for listed and large public companies.
Vacancies must be filled by the Board within six months.
Section 203 fixes executive accountability on named professional officers. The Company Secretary and Chief Financial Officer are not mere corporate employees; they are statutory officers who co-sign financial statements, certify regulatory returns, and bear personal liability under Section 2(60) as 'officers in default' for corporate non-compliance.