KMP - Key Managerial Personnel

Key Managerial Personnel (KMP) are the senior officers legally responsible for running a company and are individually accountable for its compliance under the Companies Act, 2013. The term is defined in Section 2(51), and Section 203 requires certain companies to appoint whole-time KMP by a Board resolution that fixes the terms and remuneration.

Who is a KMP

• Managing Director (MD), Chief Executive Officer (CEO) or manager, and in their absence a whole-time director;
• Company Secretary (CS);
• Chief Financial Officer (CFO);
• any other whole-time officer, not more than one level below the directors, designated as KMP by the Board.

Who must appoint KMP

Under Section 203 read with Rule 8 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, every listed company and every other public company with paid-up share capital of Rs 10 crore or more must appoint a whole-time MD/CEO/manager, a CS and a CFO. Separately, Rule 8A requires any private company with paid-up share capital of Rs 10 crore or more to appoint a whole-time Company Secretary, even though it is otherwise outside the full KMP mandate.

Key rules and consequences

A whole-time KMP cannot hold the same office in more than one company at a time, except in a subsidiary. A vacancy in a KMP position must be filled by the Board within six months. Non-compliance attracts penalties on the company and every defaulting director and KMP under Section 203(5). KMP details are reported to the MCA (for example in Form MGT-7 and DIR-12), and KMP are "officers in default" for many governance breaches.