Executive Search and Senior Appointments
At a certain level a hire stops being only an employment decision and becomes a corporate act with its own filings, eligibility tests and consequences for the company. This guide covers where that line falls, what the company law machinery requires, and the checks that belong before an offer rather than after it.
- When a hire is also a statutory appointment
- Key managerial personnel and the thresholds that trigger them
- Director appointment mechanics, and the KYC filing that is now triennial
- The independent director databank and proficiency test
- Search discipline at senior level
Employment and office are not the same appointment
A chief executive can hold two positions at once: an employment contract, and an office under the Companies Act with duties owed to the company and liabilities that attach personally. The two are created differently, are governed by different law, and end differently. Terminating the employment does not by itself vacate the office, and a board removing someone from office does not by itself terminate the employment contract.
The practical consequence at hiring is that two sets of documentation are needed and they have to be consistent: the employment contract and appointment letter on one side, and the board and shareholder approvals, consents and filings on the other. Where they conflict, which happens more often than it should, the exit is where the conflict surfaces.
Who must be appointed, and by which companies
Section 203 of the Companies Act, 2013 with Rule 8 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 requires every listed company and every other public company having paid-up share capital of ten crore rupees or more to have whole-time key managerial personnel: a managing director, chief executive officer or manager, or in their absence a whole-time director; a company secretary; and a chief financial officer.
Rule 8A, which is the one people get wrong, applies to private companies. As substituted with effect from financial years commencing on or after 1 April 2020, every private company with paid-up share capital of ten crore rupees or more must have a whole-time company secretary. The threshold was raised from five crore rupees by the amendment rules notified as G.S.R. 13(E) on 3 January 2020, and guidance written before then states the lower figure.
A proposal by the company secretaries institute in July 2026 to extend Rule 8A to companies with borrowings above fifty crore rupees is a proposal and not law.
The penalty under section 203(5) falls differently on the company and on the individuals. The company pays a fixed ₹5 lakh. Each director and key managerial person in default pays ₹50,000, plus ₹1,000 for every day after the first during which the default continues, capped at ₹5 lakh per person. The continuing daily penalty runs against the individuals, not the company, and the provision reaches every director and key managerial person in default rather than officers in default generally.
The mechanics, and one filing that changed
A director appointment runs on its own machinery: a director identification number, the individual's written consent to act, a declaration that they are not disqualified, board or shareholder approval as the case requires, and filings within statutory time limits. Disqualification and the limit on the number of directorships a person may hold are both statutory tests that should be checked before an offer, not after acceptance.
| Requirement | Provision | Form |
|---|---|---|
| Director identification number | Sections 152(3), 153 and 154, rule 9 | DIR-3, or through SPICe+ (INC-32) for a proposed first director |
| Consent to act as director | Section 152(5), rule 8 | DIR-2 |
| Filing the appointment and consent | Section 170(2), rules 8 and 18 | DIR-12, within thirty days of appointment |
| Declaration of disqualification | Section 164(1) or 164(2), rule 14(1) | DIR-8, before appointment or reappointment |
| Company report of a section 164(2) default | Rule 14(2) | DIR-9 |
| Application to remove a disqualification | Rule 14(5) | DIR-10 |
The current DIR-8 was substituted by the 2023 amendment rules of 20 January 2023 and now covers disqualification under both section 164(1) and section 164(2).
Section 164(1) carries the individual grounds: unsoundness of mind declared by a competent court, undischarged insolvency or a pending insolvency application, a specified criminal conviction and sentence, a subsisting court or Tribunal disqualification order, calls unpaid for six months, conviction for a section 188 related-party offence in the preceding five years, and failure to obtain a director identification number as required by section 152(3).
Section 164(2) is the company-default ground and is the one that catches people. It applies to a person who is or has been a director of a company that has not filed financial statements or annual returns for three continuous financial years, or has failed for at least a year to repay deposits or interest, redeem debentures or pay interest, or pay a declared dividend. The restriction is against reappointment in that company or appointment in another for five years. A person joining a company already in default has six months of statutory protection before the disqualification attaches.
Section 165 permits twenty directorships in total, including alternate directorships, of which no more than ten may be in public companies. A private company that is a holding or subsidiary company of a public company counts as a public company for the ten; a dormant company is excluded from the twenty. Members may set a lower limit by special resolution.
One filing did change and is worth knowing because most published compliance calendars are wrong about it. Director KYC is now triennial, not annual. The Companies (Appointment and Qualification of Directors) Amendment Rules, 2025, notified as G.S.R. 943(E) on 31 December 2025 and effective 31 March 2026, substituted rule 12A so that an individual holding a director identification number as on 31 March of a financial year files the intimation on or before 30 June of the immediately following every third consecutive financial year. For a director already compliant, the next filing is due 30 June 2028. A change of mobile number, email address or residential address must still be reported within thirty days. A compliance calendar still showing 30 September annually is describing the old rule.
The databank, the test and who is exempt from it
An individual appointed or intending to be appointed as an independent director must register with the independent directors databank maintained by the Indian Institute of Corporate Affairs. Unless exempt, they must clear the online proficiency self-assessment test within two years of registration, extendable by one year on payment of a fee, with a pass mark of not less than fifty per cent in aggregate. There is no limit on attempts, and the test cannot be retaken once passed.
The exemptions are broader than commonly assumed and are worth checking before someone books a test. Three or more years of experience as a director or key managerial person in a listed company, in an unlisted public company with paid-up capital of ten crore rupees or more, in a body listed on a recognised stock exchange, in an overseas body with capital of two million United States dollars or more, or in a statutory corporation, all exempt. So do director-level posts in central or state government in commerce, corporate affairs, finance, industry or public enterprises; posts of chief general manager and above at the securities, banking, insurance or pension regulators in corporate, securities or economic law; and ten or more years in practice as an advocate, chartered accountant, cost accountant or company secretary.
| Class of company | Minimum independent directors |
|---|---|
| Every listed public company | At least one-third of the total number of directors, any fraction rounded up |
| Unlisted public company meeting any rule 4 threshold | At least two |
| Private company | No general requirement under section 149(4) and rule 4 |
Section 149(4) of the Companies Act 2013 with rule 4 of the Companies (Appointment and Qualification of Directors) Rules 2014.
An unlisted public company crosses into the requirement on any one of three tests, measured on the last date of the latest audited financial statements: paid-up share capital of ₹10 crore or more, turnover of ₹100 crore or more, or aggregate outstanding loans, debentures and deposits exceeding ₹50 crore. The third is a combined balance, not ₹50 crore for each category separately, which is the usual misreading.
A joint venture, a wholly owned subsidiary and a dormant company under section 455 are outside the rule 4 threshold requirement altogether.
Falling below the thresholds does not end the obligation at once. The company stops being required to comply only after it has failed all three tests for three consecutive years, and the requirement revives when it meets any one of them again.
Two things can push the number above the statutory minimum. Where the audit committee composition requires more independent directors, the higher number applies. And for an equity-listed entity regulation 17 of the listing regulations can require one-half rather than one-third, where the chairperson is an executive director or where specified promoter-related conditions apply. The higher applicable requirement governs.
The approval regime, and a negative finding
Managerial remuneration above statutory limits requires approval, and where profits are absent or inadequate the position is governed by Schedule V.
The last substantive change to this regime took effect on 18 March 2021 and nothing has moved since. Section 197(3) was amended by the Companies (Amendment) Act 2020 to extend the inadequate-profit remuneration framework to non-executive directors including independent directors, commencing through S.O. 1255(E), and Schedule V was amended the same day through S.O. 1256(E) to insert separate limits for other directors. No later operative amendment to section 197 or Schedule V had been identified as at 17 September 2026. A 2023 amendment to the managerial personnel rules substituted Forms MR-1 and MR-2 and did not touch the Schedule V limits or conditions, and the Corporate Laws (Amendment) Bill 2026 remains a Bill.
At the hiring stage the practical point is that a senior offer should be made conditional on the approvals it requires, rather than made and then taken to a board that has no realistic option but to approve it.
What changes about search at this level
Senior searches fail for reasons that are visible in advance. The specification describes a person rather than a mandate, so every candidate is measured against an unwritten idea nobody has agreed. The process has too many decision makers and no decision rule, so it drifts until the best candidates withdraw. Or references are taken at the end as a formality, when they are the most informative part of the assessment and should be taken from people the candidate did not nominate.
Two disciplines are worth insisting on. Agree the mandate in writing before the search opens: what this person must achieve in eighteen months, and what would constitute failure. And run the statutory checks in parallel with the assessment rather than after the offer, because a disqualification or a directorship limit discovered late is a withdrawn offer.
Confidentiality is the other operational constraint. At this level candidates are employed, often visibly, and an approach that becomes known damages them. That shapes how a search can be run and is one of the reasons senior work is retained rather than contingent.
Questions about senior appointments
Does every senior hire need a board resolution?
No. Employment of a senior executive is generally a management decision. What needs corporate action is appointment to an office: a director, or one of the key managerial personnel a company is required to have. The two are frequently conflated in offer documentation.
Can we appoint someone as chief executive officer without making them a director?
Yes, and it is common. Chief executive officer is one of the key managerial personnel categories and does not by itself carry board membership, though the office carries its own statutory duties.
How long should a senior search take?
Twelve to sixteen weeks to offer for most senior mandates, plus a notice period that is frequently three months. A process promising materially faster is usually presenting an existing network rather than conducting a search, which is sometimes what you want, but it should be a choice.
Where to go next
Talent Acquisition
Back to the main page: how we recruit, what we take on, and how to reach us.
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Campus Hiring, Internships and Apprenticeships
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Send an enquiry
For a senior mandate, the useful first conversation is about what the person has to achieve rather than what they have to have done. Tell us that, and whether the role carries a statutory office.
Position as at 17 September 2026. Reviewed every six months.
This page is general information, not professional advice. Indian employment law is in the middle of the largest transition it has had in seventy years. The four Labour Codes commenced on 21 November 2025, two of them only in part, repealing twenty-nine central Acts. New central rules under two of the Codes were notified in May 2026 and new provident fund and pension schemes in June 2026, one of which was corrected in August 2026. The Digital Personal Data Protection Act is commencing in phases that run to 2027. Several positions on these pages are marked as unresolved because the primary source could not be read, and a page that pretended otherwise would be worth less than one that says so. Take professional advice before acting on anything on this page. We are happy to be that adviser, but we do not act on a web page, ours or anyone else's, without one.