Resolution fo Increase in Managerial Remuneration

Company Secretary

Can Anyone provide me the Resolution for Increase in Remuneration of a Managerial Person in case of inadequacy of profits as per Sc. XIII.



Prasad Keluskar

Company Secretary and Compliance Officer


In case of inadequacy of profits yes you have to take the route of SCH XIII. Also you have to constitute remuneration committee as desired by SCH XIII.

First get increase in remuneration proposal approved by remuneration committee through a resolution of remuneration committee.

Then remuneration committee forwards its recommendation to the board of directors for final approval.

This is the basic procedure.

Also figure out the exact table of Sch XIII applicable to your case. You also have to take approval of share holders. Further if you want to give maximum remuneration as per sch XIII then CG approval is also required.

Find attached herewith a useful file for remuneration.


Company Secretary and Compliance Officer

Find below resolution of Remuneration Committee:




RESOLVED THAT pursuant to the provisions of section 198, 269, 309, 310 and 311 read with schedule XIII of the Companies Act, 1956 and other applicable provisions, if any, of the Companies Act, 1956 (including any statutory modification or re-enactment thereof for the time being in force) and pursuant to Articles of Association of the company Remuneration Committee of the Board of Directors of the Company be and is hereby approve and recommend to the Board the alteration in the remuneration structure payable to Mr. Uday Jain, Managing Director of the Company with effect from April 1, 2006 on the salary, allowance and perquisites as under:


Ø  Details of remuneration are:


      Salary                                                               Rs. ________per annum


Salary mentioned above includes perquisites payable to Mr. Uday Jain but in any case the total managerial remuneration shall not exceed the maximum limit prescribed under the Companies Act. Perquisites are classified into two categories A and B as follows: -



Category A


·         The company will reimburse leave travel expenses for self subject to ceiling of one month’s basic salary per annum.

·         Reimbursement of medical expenses for self and family, subject to ceiling of one month’s basic salary per annum.

·         Personal accident insurance.

·         Fees of clubs subject to a maximum of two clubs. This will not include admission and life membership fees.

·         Reimbursement of Driver’s salary for provision of use of car for company business.


  Category B


·         Contribution to Provident Fund, Superannuation Fund or Annuity Fund will not be included in computation of the ceiling on perquisites to the extent these either singly or put together are not taxable under Income Tax Act.

·         Gratuity payable should not exceed half a month’s salary for each completed year of service.


Note:-- For the purpose of Perquisites stated in category ‘A’ above, “Family” means the spouse, the dependent children and dependent parents.  


RESOLVED FURTHER THAT the above resolution may be forwarded to the Board of Directors for its approval and Mr. ___________ be and is hereby authorised to do all such acts, deeds, matters and things as may be considered necessary, desirable or expedient for the purpose of giving effect to these resolutions.”


Find below resolution of Board of Directors:


The Board approved the recommendation of the Remuneration Committee and agreed to seek approval of the members in the ensuing Annual General Meeting on the same terms, conditions and remuneration as approved by the Board, and hence the following resolution was passed unanimously:


“RESOLVED THAT the recommendation and approval of managerial remuneration to be paid to Mr. Uday Jain, Managing Director, by the Remuneration Committee be and is hereby approved and adopted and forwarded for the approval of shareholders in the Annual General Meeting of the Company as per the notice of Annual General Meeting.


RESOLVED FURTHER THAT the Director or the Secretary of the Company be and is hereby authorised to make necessary application to the Central Government and filing of any statutory forms or other related documents for seeking its approval to the increase in the remuneration and to do all such act and things as may be necessary in this regard.”


Company Secretary


Please confirm if the Managerial Remuneration approved in the AGM is as per Part II of Schedule XIII and Now the company has declared merit increment which if given to MD will cross the limit under Schedule XIII. We should go for following procedure: Approval by Rem. comm then Board Approval, S'holders approval by postal ballot & lastly C.Govt. Approval.  Also if u have any specimen resolution regarding the above, request u to please forward the same.

Best Regards,

Ashish Darak

+91 9909010351.



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