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    40.schedule XIII Compliance With Sec 209

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    mercatuz
    This document discusses the compliance requirements for companies to pay remuneration to managing or whole-time directors under Schedule XIII of the Companies Act, 1956. [1] Schedule XIII sets parameters for director remuneration and obviates the need for government approval if those parameters are met. [2] It applies only to public companies and private subsidiaries of public companies. [3] Schedule XIII outlines qualifications for managerial positions and remuneration limits. Government approval is required if appointment or remuneration is not in accordance with Schedule XIII.

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    40.schedule XIII Compliance With Sec 209

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    mercatuz
    30 views5 pages
    This document discusses the compliance requirements for companies to pay remuneration to managing or whole-time directors under Schedule XIII of the Companies Act, 1956. [1] Schedule XIII sets parameters for director remuneration and obviates the need for government approval if those parameters are met. [2] It applies only to public companies and private subsidiaries of public companies. [3] Schedule XIII outlines qualifications for managerial positions and remuneration limits. Government approval is required if appointment or remuneration is not in accordance with Schedule XIII.

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    40.Schedule XIII Compliance With Sec 209

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    This document discusses the compliance requirements for companies to pay remuneration to managing or whole-time directors under Schedule XIII of the Companies Act, 1956. [1] Schedule XIII sets parameters for director remuneration and obviates the need for government approval if those parameters are met. [2] It applies only to public companies and private subsidiaries of public companies. [3] Schedule XIII outlines qualifications for managerial positions and remuneration limits. Government approval is required if appointment or remuneration is not in accordance with Schedule XIII.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    30 views5 pages

    40.schedule XIII Compliance With Sec 209

    Uploaded by

    mercatuz
    This document discusses the compliance requirements for companies to pay remuneration to managing or whole-time directors under Schedule XIII of the Companies Act, 1956. [1] Schedule XIII sets parameters for director remuneration and obviates the need for government approval if those parameters are met. [2] It applies only to public companies and private subsidiaries of public companies. [3] Schedule XIII outlines qualifications for managerial positions and remuneration limits. Government approval is required if appointment or remuneration is not in accordance with Schedule XIII.

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    Attribution Non-Commercial (BY-NC)
    Download as DOCX, PDF, TXT or read online from Scribd
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    of 5

    SCHEDULE XIII COMPLIANCE WITH SECTION 269

    Schedule XIII to the Companies Act

    Schedule XIII to the Companies Act, 1956 was put in place with the primary objective of obviating the need for seeking Central Government approval by Companies to pay remuneration to their managing or whole-time directors if they satisfied the parameters set out therein. Schedule XIII is divided in three parts. Part I deals with Appointments; Part II deals with Remuneration; and Part III deals with Provisions applicable to Part I and Part II of this schedule.

    Applicability of Section XIII

    The provisions contained in Section 198 and 269 read with Schedule XIII are applicable only to (a) a public limited company and (b) a private limited company, which is subsidiary of a public Company. The provisions of Schedule XIII are not applicable to Government Companies. Schedule XIII is divided into three parts as detailed below:a) Part I- deals with the qualifications and appointment of managerial person b) Part II- deals with the remuneration payable; and c) Part III- deals with requirements like share holders' approval and compliance certificate to be obtained from the auditor or company secretary.

    Section 269 - Appointment of Managing Director or Whole Time Director or Manager to require Government approval in certain cases

    MANAGERIAL PERSONALE

    Managing Director Managers Whole time Director.

    If appointment is made in accordance to SCHEDULE XIII, No Approval of Central Government is required. Only FORM NO. 25C is to be filed with ROC, within 90 days of appointment. If appointment is not made in accordance to SCHEDULE XIII, Approval of Central Government is required. Section 269 is applicable only to Public Company or to a Private Company which is a subsidiary of a Public Company. Here appointment includes reappointment. The Central Government may refuse appointment if in its opinion the appointment is not in the public interest or the person is not fit to be appointed or the terms and condition of the appointment are not fair and reasonable. The Central government may accord approval for a period lesser than the period for which the appointment is sought. If the appointment of a Managerial Personal is not approved by the Central Government then the person so appointed shall vacate the office on the day on which the decision of the Central Government is communicated to him/ her. If a person fails to vacate the office or omits to do so, on the appointment being refused by the Central Government then the person shall be punishable with a fine which may extend to Rs. 5,000 per day during which the person fails to vacate the office or omits to do so. The Central Government suo motto or on information received by it is of the opinion that the appointment made without approval has been made in contravention of Schedule XIII it shall refer the matter to the Tribunal. The Tribunal on receipt of reference from Central Government shall issue is Show Cause Notices to the company and the Managerial Person. If the Tribunal after giving the Company and the Managerial an opportunity of Natural Justice forms an opinion that Contravention of Schedule XIII has taken place then it shall make order imposing fine: The company shall be liable to pay a fine which may extent to Rs. 50,000/-. Every Officer of the Company who is at default shall be liable to a fine of Rs. 1,00,000/-

    The appointment of Managing Director, Manager or Whole Time Director as the case may be shall come to an end and the person so appointed shall in addition be liable to pay a fine of Rs. 1,00,000/- and shall refund the entire amount of salary, commission, perquisite and other benefits received by him between the day of appointment and the passing of order. If a Company contravenes the direction and / or fails to pay the fine imposed by the Tribunal then every officer in default shall be liable to imprisonment which extent upto 3 years and a fine which may extent to Rs. 500/- for every day of default. SCHEDULE XIII, SECTION II A. Neither Special Resolution nor approval of Central satisfied B. Only Special Resolution required But approval of Central Government not required. 2 conditions of A + 2 additional conditions C. Special Resolution and approval of Central Government required. All 4 conditions of B required . CONDITIONS: 1. Payment of Remuneration is approved by a resolution passed by the Remuneration Committee. 2. Company has not made any default in payment of Debts, Dividends, and Interest for a period exceeding 30 days in the preceding financial year before the date of appointment. 3. Special Resolution was passed at the General Meeting of the Company for payment of Remuneration for a period not exceeding 3 years. 4. A statement along with notice calling the General Meeting is to be given to shareholders containing the prescribed information. CLAUSE C is also applicable when the effective capital is NEGATIVE. In case of inadequate profit or loss the Managerial Remuneration of a Managerial Personal should be fixed as per Part II of Schedule XIII, when it is stated that in case of loss the Maximum Remuneration should be based on the Effective Capital of the Company. Government. ONLY 2 conditions to be

    In case the Managerial Personal is appointed the Company is a profit making company, but subsequently started incurring losses, in that case also the Managerial Remuneration to Managerial Personal must be paid according to Schedule XIII, otherwise prior approval of Central Government will be required. Therefore his remuneration should be modified in accordance with the Effective Capital or prior approval of Central Government will be required. Formulae to calculate effective capital: Paid up Share Capital (+) (+) (+) Share Premium Reserve and Surplus (Excluding Revaluation Reserve) Long term loans and deposit - repayable after 1 year. xxx xxx xxx xxx. xxx

    xxx

    (excluding working capital, loan, overdraft, short term loan)

    (-) (-) (-)

    Investment Accumulated Loss Preliminary expenses not yet written off

    xxx xxx xxx

    Effective Capital

    xxx

    Effective Capital on the last date of preceding financial year in which appointment is made is to be taken.

    Questions: 1. The Effective Capital of the Company is Negative. Please suggest how to calculate the Maximum remuneration slab payable to Directors under Part II of Section II of Schedule XIII of the Companies Act, 1956?
    Source : CA Club

    Compiled By

    : Fathima Beevi S

    Email ID & Mob. : [email protected], 9496818357

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