close x


Section 217(2A) Companies Act


Dear Members

Kindly clarify whether the Managing Director of a Company will be termed as Employee of the Company within the meaning of Section 217(2A) of the Companies Act, 1956.

(Note : My company MD is drawing remuneration in excess of Rs.2.00 lacs per month [24.00 lacs per annum]. I want to know whether the details of his remuneration need to be included with the Directors Report.

with regards

Muralidharan

 
Reply   
 
Vice President (Corporate)

Yes pl.

 

 
Reply   
 



Yes he is employee u/s 217(2A).

 
Reply   
 
Company Secretary & Compliance Officer

Whether Whole time Directos of the Company are employee u/s 217(2A)?

 
Reply   
 

No the Managing Director is not a employee of the Company under Section 217(2A) of the Companies Act, 1956.

 
Reply   
 
Company Secretary and AVP Legal

 Yes, MD is an employee of the Company. Many companies give this details in their report. Please check report of Infosys.

 
Reply   
 
Company Secretary & Compliance Officer

Dear Malav,

 

This is not the valid reason, many Companies also not give such details.

Neither  Managing Director  nor Whole Time Directors are employee of the Company,.

 

In my opinion the details of MD and WTD are not required to give under section 217(2A) as such they are not the employee of the Company under the Companies Act.  Moreover the under schedule VI the details of the managerial remuneration are required to give seperately, thus why we give same detail at two places.

Further, section 217(2A) also applies to the employees whose salary is less than Rs. 24 lacs per annum if their salary exceeds the salary of MD, WTD and Manager.

 
Reply   
 
Company Secretary


 

Dear Mr. Murlidharan

 

Yes, details of MD other employee required to be discloseed under section 217(2A) of the Companies Act, 1956 read with Companies (Particulars of Employees) Rules, 1975 who drawing remuneration in excess of Rs.2.00 lacs per month [24.00 lacs per annum].


Total thanks : 1 times

 
Reply   
 
Company Secretary & Compliance Officer

Dear All,

In my opinion MD and WTD are not the employees of the Company, they are the Directors of the company and being a director they have entrusted some additional responsibilities and liabilities, so how can we categorised a director of company as a employee.

 

Their are separate provisions for the remuneration of MD or WTD or Manager and also shows separetaly.

 

Under section 217(2A) the particulars of employees whose salary exceeds Rs. 24 Lacs per annum or 2 Lacs per month are required to be disclosed (as per clause i and ii) and clause iii the details of such employees are required to be given whose remuneration is more than the remuneration of MD or WTD or Manager.

Thus according to me the details of WTD and MD should not be shown under section 217(2A). 

Please correct me if i am wrong.

 
Reply   
 
Company Secretary and Compliance Officer

Agree with Mr. Malav

 

The remuneration given to the MD being a contractual employee should be given in the board report u/s 217 (2A) if the remuneration exceeds the prescribed limits.

 

However in response to an old corporate query Deptt expressed contrary view. But it was just a view and doesn't have the force of law in the form of DCA Circular/Notification.

 

Regards

 
Reply   
 

LEAVE A REPLY



    

Your are not logged in . Please login to post replies

Click here to login   Click here to Register



 



Share on :