TMI BlogCONDITIONS TO BE FULFILLED FOR THE APPOINTMENT OF A MANAGING OR WHOLE-TIME DIRECTOR OR A MANAGER WITHOUT THE APPROVAL OF THE CENTRAL GOVERNMENTX X X X Extracts X X X X X X X X Extracts X X X X ..... ities Act, 1955 (10 of 1955); (vi) the Companies Act, 2011; (vii) the Securities Contracts (Regulation) Act, 1956 (42 of 1956); (viii) the Wealth-tax Act, 1957 (27 of 1957); (ix) the Income-tax Act, 1961 (43 of 1961); (x) the Customs Act, 1962 (52 of 1962); (xi) the Competition Act, 2002 (12 of 2003); (xii) the Foreign Exchange Management Act, 1999 (42 of 1999); (xiii) the Sick Industrial Companies (Special Provisions) Act, 1985 (1 of 1986); (xiv) the Securities and Exchange Board of India Act, 1992 (15 of 1992); (xv) the Foreign Trade (Development and Regulation) Act, 1922 (22 of 1922); (xvi) the Prevention of Money-Laundering Act, 2002 (15 of 2003); (b) he had not been detained for any period under the Conservation of Foreign Exchange and Prevention of Smuggling Activities Act, 1974 (52 of 1974): Provided that where the Central Government has given its approval to the appointment of a person convicted or detained under sub-paragraph (a) or sub-paragraph (b), as th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... higher of the limits under (A) and (B) given below: (A): (1) (2) Where the effective capital is Limit of yearly remuneration payable shall not exceed (Rupees) (i) Negative or less than 5 crores 30 lakhs (ii) 5 crores and above but less than 100 crores 42 lakhs (iii) 100 crores and above but less than 250 crores 60 lakhs (iv) 250 crores and above 60 lakhs plus 0.01% of the effective capital in excess of Rs. 250 crores: Provided that the above limits shall be doubled if the resolution passed by the shareholders is a special resolution. Explanation . It is hereby clarified that for a period less than one year, the limits shall be pro-rated. (B) In the case of a managerial person who was not a shareholder, employee or a director of the company at any time during the two years prior to his appointment as a managerial person, 2.5% of the current relevant profit: Provided that if the resolution passed by the shareholders is a special resolution, this limit shall be doubled: Provided further that the limits specified under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ance , if any, attached to the financial statement: (i) all elements of remuneration package such as salary, benefits, bonuses, stock options, pension, etc., of all the directors; (ii) details of fixed component and performance linked incentives along with the performance criteria; (iii) service contracts, notice period, severance fees; (iv) stock option details, if any, and whether the same has been issued at a discount as well as the period over which accrued and over which exercisable. Section III. Remuneration payable by companies having no profit or inadequate profit without Central Government approval in certain special circumstances: In the following circumstances a company may, without the Central Government approval, pay remuneration to a managerial person in excess of the amounts provided in Section II above: (a) where the remuneration in excess of the limits specified in Section I or II is paid by any other company and that other company is either a foreign company or has got the approval of its shareholders in general meeting to make such payment, and trea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al year, may pay remuneration up to Rs. 2,40,00,000 per annum. Section IV. Perquisites not included in managerial remuneration: 1. A managerial person shall be eligible for the following perquisites which shall not be included in the computation of the ceiling on remuneration specified in Section II and Section III: (a) contribution to provident fund, superannuation fund or annuity fund to the extent these either singly or put together are not taxable under the Income-tax Act, 1961 (43 of 1961), (b) gratuity payable at a rat not exceeding half a month s salary for each completed year of service, and (c) encashment of leave at the end of the tenure. 2. In addition to the perquisites specified in paragraph 1 of this section, an expatriate managerial person (including a non-resident Indian) shall be eligible to the following perquisites which shall not be included in the computation of the ceiling on remuneration specified in Section II or Section III (a) Children s education allowance: In case of children studying in or outside India, an allowance limited to a maximum of Rs. 12 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... past performance, past remuneration, etc.; (b) be in a position to bring about objectivity in determining the remuneration package while striking a balance between the interest of the company and the shareholders. Explanation V. For the purposes of this Schedule, negative effective capital means the effective capital which is calculated in accordance with the provisions contained in Explanation I of this Part is less than zero. Explanation VI. For the purposes of this Schedule: (A) current relevant profit means the profit as calculated under section 198 but without deducting the excess of expenditure over income referred to in sub-section 4 (l) thereof in respect of those years during which the managerial person was not an employee, director or shareholder of the company or its holding or subsidiary companies. (B) Remuneration means remuneration as defined in clause 78 of section 2 and includes reimbursement of any direct taxes to the managerial person. Section V. Remuneration payable to a managerial person in two companies: Subject to the provisions of sections I to IV, a managerial person shall dra ..... X X X X Extracts X X X X X X X X Extracts X X X X
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