MANAGEMENT

DIRECTORS
Directors refer to the part of the collective body known as the Board of
Directors, that is responsible for controlling, managing and directing the affairs
of a company.

Directors are considered the trustees of the company’s property and money, and
they also act as the agents in transactions that are entered into by them on behalf
of the company.

Directors are expected to perform their duties and obligations as rationally

diligent persons with skill, knowledge, and experience as the person carrying
out functions of a director and of that himself.

He/she plays multiple roles in the company, such as an agent, as an employee,

as an officer and as a trustee of the company.
Minimum and Maximum Number of Directors in a Company
The Companies Act, 2013 ('Act') prescribes the minimum and maximum number of directors in a

company. The minimum number of directors is as follows:

In the case of public limited companies - 3 directors

In the case of private limited companies - 2 directors

In the case of One-Person Companies - 1 director

The maximum number of directors a company can have is 15 directors. However, a company can appoint

more directors by passing a special resolution in its general meeting.

Residential Director:
• As per the Act, every company needs to appoint a director who has been in India and stayed for not less
than 182 days in a previous calendar year. Such a director will be a residential director.

• Duties and Responsibilities of Resident Director in India

• - Resident Director will act as any other Director of the Company.

• - He will be fully responsible as any other Director of the Company,

• - Resident Director may not be involved in operational control of the Company.

• - Resident Director is usually appointed to fulfill the statutory requirements.

• - Resident Director may participate in Board Meetings of the Company, wherever required.

• - Resident Director like any other Director is required to attend at least One Board Meeting in a
year.
Nominee Directors :
Nominee director is an individual who acts in the capacity of a director on behalf of another person (the
nominator), or according to the instructions or wishes of a nominator.

Role and Responsibilities:

Typically a nominee director is appointed by a business owner or a shareholder who has a significant
share in a company.

In most cases, the articles of association of a company or a joint

venture or shareholders’ agreement also give shareholders the
right to appoint directors.

A nominee director could also be a representative of a parent

company, a lender, or an employee.

The advantage of using a nominee director is the anonymity

it gives some business owners.
Why have a nominee director?
1: If you do not want to appear on the public registry.
2: If you want to avoid excessive taxes.

For example, registered companies are listed on an official register along

with their directors’ names.

Suppose you do not want your name listed on the register because of
business-sensitive issues or confidentiality concerns. In this case, you can
appoint a nominee director to replace you as the ‘face’ of the company.
However, you still own your business and are entirely in charge and
another reason is to avoid taxes.
Duties of the nominee Director
The nominee director:

• Must be a natural person

• Must be over 18 years of age, and

over-21 in other jurisdictions
• Has never been disqualified from a director
role
• Is not bankrupt

• Is not the company’s auditor

Shadow Directors:
A shadow director is a person who takes on the duties of a director but isn’t officially listed

or appointed to the board.

In other words, a shadow director acts as an alternate for a standard director. They’re

responsible for filling in when the actual director cannot fulfill their duties.

Shadow directors usually hold similar responsibilities as regular directors; however,

they’re not allowed to make decisions on behalf of the company unless they’ve been delegated

power by another staff member (usually an executive).

Small Shareholders Director:

The concept of small shareholder

director was introduced to safeguard the
interests of small shareholders in a
company.
The appointment of a small
shareholder director is a measure taken
to ensure that the small shareholders of
a company are adequately represented
and to prevent the board of directors
from taking any decisions that are
detrimental to the interests of
Shareholders.
Procedure to Appoint Small Shareholders Director:

• If the small shareholders intend to appoint a Small Shareholders Director, a notice for the
same must be issued at-least 14 days prior to the general meeting.
• The notice should include relevant details such as name, address, and number of shares
being held by the person proposed to be appointed as a Small Shareholders Director.
• Along with the notice, a statement with the following declarations must be issued:

• The proposed person’s Director Identification Number (DIN)

• The proposed person is not disqualified to become a director.
• The consent of the proposed person to act in the position of a director.

• Tenure is for 3 years and retire by rotation.

Disqualifications:
• On incurring any specified disqualifications.
• Office of directors becomes vacant due to the discovery of defects in their appointment.
• He/she declined to meet the criteria of independence.
• He/she is removed from the position by the passing of a special resolution.
Additional Director:

The Board of Directors of a Company, if authorized by the Articles of Association, may appoint
an additional director. The power conferred on the directors to appoint an additional director is
a temporary power vested in them, and this will be subject to revision or confirmation in the
General Meeting.

A person appointed as an additional director can

occupy their post until the date of the next
Annual General Meeting. In the absence of
an Annual General Meeting, their term of
appointment will conclude on the date on which
the annual general meeting
should have been held.
Powers and obligations of Additional Directors:

Though appointed on a temporary basis, an additional director is vested with

the same powers of a director. Moreover, they are subject to all obligations and

limitations of a director.

They are also entitled to seek appointment as a permanent director at the

Annual General Meeting.

The additional director must utilize his/her powers in the best interest of the

company and the shareholders.

Alternate Director:
An alternate director (AD) is a person who is appointed to attend a board
meeting in the place of another director who is unable to attend.

The AD has the same powers that the principal director would have had if they
had attended.

Once the position of the director the alternate director is covering for ceases,
the work of the alternate director will also end.

The job is often for a limited and agreed period.

Rather than being an agent of another director,

like a nominee director, the alternate director
will be seen as an officer of the company.
Alternate Director Duties and Responsibilities:
The Alternate Director should remain fully up to date with the company’s dealings and
should be ready to step in at any time.

They may only act in the absence of the director for whom they are an alternative.

If that director is not present, they can attend meetings and vote.

The alternate director is a helpful ‘device’ if, for example, a regular director is absent for an
extended period.

Alternate directors should receive all notes from meetings and committee meetings that the
principal director would have received, and they should be able to perform all of their duties
in their absence.

Alternate directors should be responsible for their actions in the same manner as regular
directors and have the same liabilities that regular directors have.
Independent Director:
Independent directors are non-executive directors of a company and help the company to
improve corporate credibility and enhance the governance standards.

In other words, an independent director is a non-executive director without a relationship

with a company which might influence the independence of his judgment.

The tenure of the independent directors is five

consecutive years; however, they shall be entitled
to reappointment by passing a special resolution
with the disclosure in the Board’s report.
Roles and Responsibilities of Independent director:

• Facilitate withstanding and countering pressures from owners.

• Fulfil a useful role in succession planning.
• On issues such as strategy, performance, risk management, resources, key
appointments and standards of conduct he or she must support in gaining independent
judgment to bear the board’s deliberations.
• While evaluating the performance of the board and management of the company, he or
she needs to bring an objective view.
• Scrutinizing, monitoring and reporting management’s performance regarding goals and
objectives agreed in the board meetings.
• Safeguard the interests of all stakeholders, particularly the minority shareholders.
• Balance the conflicting interest of the stakeholders.
• Check on the integrity of financial information and ensure financial controls and
systems of risk management are in operation.
• In situations of conflict between management and shareholder’s interest, aim towards
the solutions which are in the best interest of the company.
• Establishing suitable levels of remuneration of executive directors, key managerial
personnel, and senior management
Women Director
Women Director:
The second clause in Section 149(1) of the Companies Act, 2013 mandates
that a specific category of companies (as delineated in the Rules) must
include at least one woman director on their boards.
Rule 3 of the Rules stipulates that the following categories of companies are
obligated to appoint at least one woman director:
Every listed company
Every other public company with either:
Paid-up share capital of INR 1 billion (approx. US$12 million) or more; or
Turnover of INR 3 billion (approx. US$36.02 million) or more
 Personal Qualities of Women Director:
1. Intellectual curiosity
2. Communication Skill
3. Continuing Education
4. Active contributor
5. Confidence
6. Integrity and honesty
Duties, role and responsibilities of directors:

Women can take up a role of Nominee Director who will be nominated by a party in the company to take

care of its interest.

Duty to act in the best interests of the Company,

Duty NOT to misapply company assets

Duty NOT to make secret profits

Duty of confidentiality

Duty to NOT permit conflict of interest

Duty to attend meetings

Duty NOT to exceed powers

Executive Director
An executive director is the full-time working director of the company. They
look after the affairs of the company and have a higher responsibility towards
the company. They need to be diligent and careful in all their dealings.

Non-executive Director
A non-executive director is a non-working director and is not involved in the
everyday working of the company. They might participate in the planning or
policy-making process and challenge the executive directors to come up with
decisions that are in the best interest of the company.

Managing Director
A managing director means a director entrusted with the substantial powers of
management of the company by virtue of the articles of a company, agreement
with the company, resolution passed in the company general meeting or by the
board of directors.
Qualifications of the directors:

• The person should be above 21 years and below 70 years.

• The person should have a sound mind.
• The person should not be an undischarged insolvent.
• The person should not have applied to be adjudicated as an
insolvent.
• The person should not have been convicted by a court of an
offence.
• There should not be any order in force passed by a court or
tribunal disqualifying the person for director appointment.
• The person should have paid any calls in respect of any shares of
the company held by him/her within six months from the last
day fixed for the payment of the call.
Continued……………….
• The person must have a Director Identification Number (DIN).
• The person should not be appointed as a director in more than 19
companies or nine companies in the case of public companies
since the maximum number of companies in which a person can
act as a director is 20 companies or ten companies in the case of
public companies.
• A person cannot be appointed as a director if he/she is a director
in the following companies:
• A company that has not filed financial statements or annual
returns for a continuous period of three financial years.
• A company that has failed to repay the deposits, interest on
deposits, failed to redeem any debentures on the due date, pay
interest on debentures, or pay the dividend declared for more
than one year.
Liabilities of a Director
Liability for tax

Misstatement in company’s prospectus

Debts of the company

Fraudulent business conduct

Share application money refund

.
Liability to pay for qualification shares
Disqualifications of Directors:
• He is of an unsound mind and is declared so by the court.
• He is insolvent.
• He is in the process of declaring insolvency and his application is pending.
• He has been convicted by a court of any and has been imprisoned for at least
six months.
• If an order has been passed disqualifying him from being appointed as a
director by a court or Tribunal.
• He has not paid any calls with respect to any shares of the company.
• He has been convicted of offences dealing with related party transactions at
any time during the last preceding five years.
• He has failed to acquire a Director Identification Number.
Director’s Identification Number:

DIN is a unique Director identification number allotted by the

Central Government to any person intending to be a Director or an
existing director of a company.

It is an 8-digit unique identification number which has a lifetime

validity. Through DIN, details of the directors are maintained in a
database.

DIN is specific to a person, which means even if he is a director in

2 or more companies, he has to obtain only 1 DIN. And if he leaves
a company and joins some other, the same DIN would work in the
other company as well.
DIN Form Types:

• SPICe Form: When the applicant is applying for the first time or if the company he is
applying for is new.

• DIR-3 Form: This form is filled when the applicant is appealing to an existing company.

• DIR-3C Form: This form is submitted by the Company to Registrar for intimation of
DIN.

• DIR-4 Form: This is the verification form in which the details of the applicant is
verified.

• DIR-5 Form: If in case the person wants to surrender the DIN he needs to fill this form

• DIR-6 Form: Amendments can be made using this form by the applicant.
Procedure of filing DIR-3 Form:
a. Attachments
b. Digital Signature
c. Fee Payment
d. Generation of DIN
e. Verification of e Form
Appointment of Directors:
A company is an artificial judicial person managed and run by natural persons
known as directors. A company’s management is entrusted to its board of
directors. A board of directors is a collective body of individual directors of a
company.

Situations may arise where a company may be required to appoint more

directors to its board from time to time based on the requirements of the
business or company shareholders. However, the appointment of directors must
be according to the Companies Act, 2013 for it to be legally valid.

This article covers how a director is appointed in a company, reasons for adding
or changing directors and the documents required for director appointment.
Documents Required to Appoint a Director:
• PAN card of the director
• Identification proof, such as Voter ID, driving license,
Aadhaar card, etc
• Proof of residence, such as utility bills, rental agreement,
etc
• Passport size photograph
• Digital Signature Certificate (DSC)
How To Add A Director To Your Company?
Step 1: The proposed director should obtain a DSC if they do not have a DSC.

Step 2: The proposed director should obtain a DIN in Form DIR-3 if they do not have an active DIN.

Step 3: The company should conduct a general meeting to pass a resolution for appointing the new
director.

Step 4: The proposed director should give consent to the company for their appointment as a director in
Form DIR-2. Once the company obtains the DIR-2 from the proposed director, the person is appointed
as a director.

Step 5: After the director is appointed, the company should issue the appointment letter to the director.

Step 6: After the letter of appointment is issued, the company must file form MGT-14, DIR-2 and
DIR-12 with the ROC about the appointment within 30 days.

Step 7: The company must make necessary entries in the Register of Director and Key Managerial
Personals maintained by the company.
Legal Position of Directors:
• Describing the precise legal role of directors in a company can be quite challenging. Judges

have used various terms to define directors, such as agents, trustees, and managing partners.

• Directors are individuals who have been duly appointed by the company to direct and manage

its affairs. However, these terms, like agents and trustees, do not cover all of their powers and

responsibilities comprehensively.

• In the case of Ram Chand & Sons Sugar Mills Pvt. Ltd. v. Kanhayalal Bhargava (1966), it

was acknowledged that it’s indeed difficult to provide an exact legal position of a director in a

company.

• Judges have described it as a multi-dimensional role, which can be viewed as that of an agent,

trustee, or manager, even though these terms may not have the same legal implications in a
DIRECTORS AS AGENTS
A company cannot independently take action in its own capacity and
requires a representative. This representative role is fulfilled by the
directors, establishing a principal-agent relationship.
In this relationship, directors possess the authority to act and make
decisions on the company’s behalf. Any contracts or transactions made on
behalf of the company render the company responsible, while the
directors remain free from personal liability. Directors merely sign and
execute contracts on behalf of the company.
In the case of Ferguson v. Wilson (1904), it was legally recognized the
legal position of directors as agents of the company. This
acknowledgement stems from the legal principle that a company, as an
artificial entity, cannot function independently; it necessitates an agent to
act on its behalf.
Additionally, in the case of Ray Cylinders & Containers v. Hindustan
General Industries Limited (1998), it was clarified that directors act as
agents of the company, not of its individual members unless special
circumstances dictate otherwise. A company is legally distinct from its
Director as a Trustee
Within a company, the legal position of director is also as a trustee. This trustee role
implies that directors manage the company’s assets and work in the best interests of the
company.
A trustee is someone who can be entrusted with the company’s resources and acts to
achieve the company’s objectives rather than for personal gain. Furthermore, a trustee is
granted certain powers, such as share allocation, issuing calls, accepting or declining
transfers, etc., which are referred to as powers in trust.
In the case of Dale & Carrington Investment (P.) Ltd. v. P.K. Prathapan (2004), it
was emphasized that directors must act in a fiduciary capacity. This means they have a
duty to act on behalf of the company with the utmost care, skill, good faith, and due
diligence, primarily in the best interests of the company they represent.
As highlighted by the Madras High Court in the landmark case of V.S. Ramaswami
Iyer v. Brahmayya and Co. (1966), directors can be held liable as trustees in terms of
their authority to manage the company’s funds.
DIRECTOR AS A MANAGING PARTNER:
The directors of a company represent the shareholders’
will and wants.
They tend to act on behalf of the shareholders and their
goals.
Due to this, they enjoy vast powers and can perform many
functions that are proprietary in nature.
Due to the provisions mentioned in the MOA and AOA of
the companies, the board of directors acts as the supreme
policy and decision-making authority.
DIRECTOR AS AN EMPLOYEE/OFFICER
Shareholders elect directors in a general meeting held by the company.
Once the director is elected, he then enjoys the rights and powers that are
given to him as per the Act.
These powers and rights cannot be taken away by the shareholders and they
cannot interfere in the decision-making of the directors as such. Since
directors possess such powers and rights, they cannot be termed employees
of the company.
This is because employees have limited authority vested in them and always
work under the directions of the employer and cannot interfere in the
employer’s decision-making.
POWERS OF DIRECTORS:
Manage the Business

Delegate Authority

Recommend Dividends

Issue Shares

Appoint Company Secretary

DUTIES OF DIRECTORS

Duty of Care
Duty of Loyalty
Duty to Act within Powers
Duty to Exercise Independent
Judgement
Duty to Avoid Conflicts of Interest
REMOVAL OF DIRECTORS
Incurring any disqualifications as specified under the Companies Act.
Prolonged absence from board meetings spanning over 12 months.
Entering into contracts or agreements contrary to the provisions outlined
in Section 184 of the Companies Act.
Receiving a disqualification order from a court or tribunal.
Being convicted by a court for an offense and sentenced to a minimum of
six months in prison.
Failure to adhere to the terms and regulations stipulated in the
Companies Act of 2013.
Voluntarily resigning from their position.
METHODS FOR DIRECTOR REMOVAL
The removal of a director from a company can be carried out through
three distinct methods:
• Resignation by Directors: When the directors voluntarily tender
their resignation.
• Director Absence from Board Meetings: When a director remains
absent from board meetings for 12 months.
• Shareholder-initiated Removal: When shareholders decide to remove
a director.
According to Section 169 of the companies act will be applied for
removal.
PROCEDURE FOR REMOVAL OF DIRECTOR – RESIGNATION BY DIRECTORS
Board Meeting Notice: The Company convenes a Board Meeting, providing
clear notice, which typically means a notice period of 21 days, excluding the day
on which the notice was sent and received.
Resignation Discussion: During the Board Meeting, board members discuss
and deliberate on whether to accept the Director’s resignation.
Board Resolution for Resignation: Upon agreement, the Board passes a
formal resolution to accept the Director’s resignation.
Filing Form DIR-11 (Director’s Responsibility): The outgoing Director takes
responsibility for filing Form DIR-11. This form must include the Board
Resolution, proof of delivery of the resignation letter, and a copy.
Filing Form DIR-12 (Company’s Responsibility): The Company is
responsible for filing Form DIR-12 with the Registrar of Companies (RoC). This
filing should include the resignation letter and the Board Resolution.
Removal of Director Name from MCA: After completing all necessary form
submissions and formalities, the Director’s name will be officially removed from
the Company’s master data on the Ministry of Corporate Affairs website.
 DIRECTOR ABSENCE FROM BOARD MEETINGS FOR 12 MONTHS
The steps in case a director remains absent from all board meetings over
twelve months are as follows:

• Step 1: If a director is absent from all board meetings over twelve months,
regardless of seeking leave of absence, they are deemed to have vacated
their office under Section 167.

• Step 2: File Form DIR-12.

• Step 3: Upon completing the formalities, the concerned Director’s name will
be removed from the Ministry of Corporate Affairs (MCA) database.
DIRECTOR REMOVAL BY SHAREHOLDERS
Board Meeting Notice: Initiate the process by calling a Board Meeting and giving
seven days’ notice to all directors. In this notice, inform the directors about the
intended removal of the Director.
Extraordinary General Meeting Resolution: During the Board Meeting, pass a
resolution to convene an Extraordinary General Meeting (EGM). Additionally, pass a
resolution for removing the Director, contingent upon shareholder approval.
EGM Notice to Members: Issue a notice for the EGM, ensuring a clear notice
period of 21 days. Clear notice means a notice period of 21 days, excluding the day
on which the notice is sent and the day of the meeting.
Voting at EGM: Members are asked to vote on the resolution for the Director’s
removal at the EGM. If the majority of members are in favor of the decision, the
resolution is passed.
Opportunity for Director to Be Heard: Allow the Director to be heard before
passing the resolution. Allow them to present their case or provide an explanation.
Form DIR-11 and Form DIR-12 Submission: Following the passing of the
resolution, submit Form DIR-11 and Form DIR-12 to the Registrar of Companies.
These forms should include the attachments of the Board Resolution and Ordinary
Resolution.
Removal of Director Name from MCA: Upon successful form submissions and
completion of all required formalities, the Director’s name will be officially removed
from the Ministry of Corporate Affairs website.
COMPULSORY CRITERIA FOR DIRECTOR REMOVAL
For the removal of a director, the following mandatory requirements must be
adhered to:
• A Special Notice following Section 115 of the Companies Act 2013 must be
issued.
• The Special Notice should be dispatched to the respective Director at least
14 days before the resolution is passed.
• It is obligatory to provide the concerned Director with an opportunity to
present their case, and their representation should be submitted in written
form.
• A director who has been removed from office cannot be reappointed.
 IMPLICATIONS OF DIRECTOR REMOVAL
•Termination of Director’s Duties: Once a director is removed, they are
no longer responsible for the management and decision-making of the
Company.

•Loss of Authority: The removed Director loses their authority to act on

behalf of the Company and represent its interests.

•Legal Consequences: If the removal is not carried out following the legal
requirements, it may result in legal disputes and potential claims against
the Company.

•Reputation Damage: Director removal can impact the Company’s

reputation, especially if it becomes public knowledge. It is crucial to handle
the process with sensitivity and confidentiality.
 KEY MANAGERIAL PERSONNEL
• Chief Executive Officer or Managing Director
• Company secretary
• Whole-Time Director
• Chief Financial Officer
• Such other officers, designated by the Board as KMP but are not
more than one level below the directors in whole-time
employment
• Such other officer as may be prescribed
 CHIEF EXECUTIVE OFFICER OR MANAGING DIRECTOR
• The Chief Executive Officer and Managing Director are responsible for
running the company.
• The Managing Director has authority over all company operations.
• They are also responsible for growing and innovating the company to a
larger scale.
• Under the Act, the Managing Director is defined as a director having
substantial powers over the company management and its affairs.
CONTINUED………..
A Managing Director is appointed through any of the following means:
•By the Articles of Association
•An agreement with the company
•A resolution passed in a general meeting
•By the company board of directors
The Act defines a manager as the individual who manages the whole company affairs,
subject to the board of directors’ direction, control and superintendence.
A manager also includes a director or a person occupying a manager position in a
company, even under a contract of service. However, a company cannot appoint a
managing director and a manager at the same time.
 COMPANY SECRETARY
• A company secretary is responsible for looking after the efficient administration of the
company.
• They take care of the company’s compliance and regulatory requirements.
• They also ensure that the instructions and targets of the board are implemented.
• As per the Act, a company secretary or secretary means a company secretary defined
under Section 2 of the Company Secretaries Act, 1980.
• The Company Secretaries Act defines a Company Secretary as a person who is a
member of the Institute of Company Secretaries of India (ICSI).
• The company secretary should ensure that the company complies with secretarial
standards.
 WHOLE-TIME DIRECTOR

• Under the Act, a Whole-Time Director is defined as a director

who is in whole-time employment of the company.

• A Whole-Time Director means a director who works during the

entire working hours of the company.

• They are different from an independent director as they are part

of the daily operation and has a significant stake in the company.

• A Managing Director can also be a Whole-Time Director.

 CHIEF FINANCIAL OFFICER

• A Chief Financial Officer is responsible for handling the

company’s financial status.
• They keep a tab on cash flow operations, create
contingency plans for financial crises and do financial
planning.
• They lead the treasury and financial functions of the
company.
 COMPANIES REQUIRED TO APPOINT KMP

Rule 8 of the Companies (Appointment and Remuneration of

Managerial Personnel) Rules, 2014 provides the class of
companies that must appoint the whole-time KMP, which are
as follows:
•Every listed company
•A public company having a paid-up share capital of Rs.10
crore or more
Further, a private company having a paid-up share capital of
Rs.10 crore or more must appoint a whole-time company
secretary.
 PERSONS WHO CANNOT BE APPOINTED AS KMP
The Act states that a company cannot continue the employment or appoint a

managing director, whole-time director or manager when such person:

•Has attained 70 years or is below 21 years

•Has been convicted as an insolvent or is an uncharged insolvent

•Has suspended payment to the creditors at any time

•Has been convicted for an offence by a court and sentenced to more than six

months period.
 ROLE AND RESPONSIBILITIES OF KMP
The KMPs are responsible for taking crucial company decisions and managing
the employees.
They are also liable when the company does not follow the mandatory
compliances laid down by the Act.
The primary responsibilities and functions of the KMP are:
•As per Section 170 of the Act, the details about the securities held by the
KMPs in the company or its subsidiaries must be disclosed and recorded in
the Register.
•The KMPs have the right to state their opinion, especially in the Audit
Committee meetings, but they do not have a voting right.
•As per Section 189(2) of the Act, the KMPs should disclose their interests in
 PENALTY FOR NON-APPOINTMENT OF KMP
• When a company does not appoint KMP as provided in the Act, the company
will be liable to pay a penalty of Rs.5 lakh, and every director and KMP, if any,
of the company in default will be liable to a penalty of Rs.50,000.
• A further penalty of Rs.1,000 per day but not exceeding Rs.5 lakh will be
imposed after the first day, during which such default continues.
• The KMPs of the company are essential persons who look after the
management and affairs of a company.
• The companies specified under Rule 8 of the Companies (Appointment and
Remuneration of Managerial Personnel) Rules, 2014, must mandatorily
appoint KMP for the company management, or they will have to pay a penalty
as provided under the Act.