remuneration and reappointment of CMD

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ars

445 Points Joined February 2009

by reading sec. 198, 269, 309-311 and sch. XIII, I understand that :

The salry to the MD shall be - firstly in accordance with sec. 198. If it is found less than resort to sch. XIII and pay as per the slabs.

However, if the desired salary is still found to be less then define a salary by passing a sp. resolution in the GM with his reappointment, specify the payment details and apply to the C.Gov. thru form 25A. - ref.269,309,310,311

Is this correct?

Further if the MD is over 70 yrs. now and is to be reappointed in the ensuing AGM- the sp. resolution should indicate his age or will it be ok if it is mentioned in the explanatory stat. to the resolution.- what should be mentioned in either case? I have not come across such resolution/ expl. stat.

Request to share GM resolution for the re-appointment of MD.

experts are requested to reply urgently.

Replies (2)

ars

445 Points Joined February 2009

pl. provide comments

Rajeev kumar Nayak

ACS

283 Points Joined April 2010

Hi,

Following points may help you to claify your problem:--

1. Section 198 of CA, 1956 deals with the overall remuneration to all the Board Members i.e MD, WTD, and other non-executive directors and maximum ceiling is 11 % of NP.

2. Section 309 deals with the specific provisions of remuneration to MD, WTD and other directors subject to the provision of Section 198 of CA, 1956.

As per Section 309 one MD or WTD may be paid upto 5 % of NP and all of them may be paid upto 10 % of NP. All other Directors (i.e. all Non- Executive Directors) may be paid upto 1 % of NP if there is any MD or WTD. If no MD or WTD, then 3 % of NP may be paid.

Schedule XIII deals with provision related appointment and remuneration of Managerial Personnel(i.e. MD/WTD/Manager). It does not deals with provisions related to Non-Executive Directors.

The first part of Schedule XIII deals with certain conditions of appointmnet of Managerial Personnel. Second part deals with Remuneration. The relevance of Schedule XIII in respect of remuneration comes in respect of inadequacy of profits. In case of adequate profit, Schedule XIII has no relevance.

In case of inadequacy of profits, remuneration can be paid to Managerial Personnel as per the scale given in the Schedule subject to compliance of conditions specified therein.

In respect of MD aged 70 years or more, Special resolution is required to be passed. however the age is not required to be given in Resolution. The information given in explanatory statement will be enough.

If u need any other clariffication, feel free to say....

Thanks & Regards

Rajeev Nayak