Remuneration to managerial person appointed under Companies Act, 1956 after 01.04.2014

Gen­er­al Cir­cu­lar No. 07/2015

Dat­ed: 10^th April, 2015

Sub­ject: Remu­ner­a­tion to man­age­r­i­al per­son under Sched­ule XIII of the Com­pa­nies Act, 1956 – Clar­i­fi­ca­tion with regard to pay­ment for period.

Stake­hold­ers have drawn atten­tion to the Pro­vi­sions of Sched­ule XIII (sixth pro­vi­so to Para © of Sec­tion ll of Part ll) of the Com­pa­nies Act, 1956 (Ear­li­er Act) and as clar­i­fied vide Cir­cu­lar num­ber 14/11/2012-CL-VII dat­ed 16th August, 2012, which allowed list­ed com­pa­nies and their sub­sidiaries to pay remu­ner­a­tion, with­out approval of Cen­tral Gov­ern­ment, in excess of lim­its spec­i­fied in para II Para © of such Sched­ule if the man­age­r­i­al per­son met the con­di­tions spec­i­fied there­in. Stake­hold­ers have expressed that since sim­i­lar pro­vi­sions are not avail­able in the Sched­ule V of the Com­pa­nies Act, 2013, there is a need for a clar­i­fi­ca­tion that a man­age­r­i­al per­son appoint­ed in accor­dance with such pro­vi­sion of Sched­ule XIII of Ear­li­er Act may receive rel­e­vant remu­ner­a­tion for the peri­od as approved by the com­pa­ny in accor­dance with such pro­vi­sions of Ear­li­er Act.

2. The mat­ter has been exam­ined in the light of ear­li­er clar­i­fi­ca­tions on tran­si­tion­al mat­ters issued by the Min­istry. It is clar­i­fied that a man­age­r­i­al per­son referred to in para 1 above may con­tin­ue to receive remu­ner­a­tion for his remain­ing term in accor­dance with terms and con­di­tions approved by com­pa­ny as per rel­e­vant pro­vi­sions of Sched­ule XIII of ear­li­er Act even if the part of his/her tenure falls after 1st April, 2014.

3. This issues with the approval of the com­pe­tent authority.