Amendment in "Appointment and remuneration of managerial personnel" rules



Quick Summary
The Ministry of Corporate Affairs has introduced amendments to the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014. These new rules, effective from 1st April 2020, mandate that every private company with a paid-up share capital of ₹10 crore or more must appoint a whole-time Company Secretary. Additionally, companies with outstanding loans or borrowings from banks or public financial institutions amounting to ₹100 crore or more will also need to comply with related provisions.

[To be published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-Section (i)] 

MINISTRY OF CORPORATE AFFAIRS 
NOTIFICATION 

New Delhi, 3rd January, 2020 

G.S.R.- In exercise of the powers conferred by sub-section (1) of section 203 of the Companies Act, 2013 (18 of 2013) read with section 469 of the said Act, the Central Government hereby makes the following rules further to amend the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, namely:-

1. (1) These rules may be called the Companies (Appointment and Remuneration of Managerial Personnel) Amendment Rules, 2020. 

(2) They shall be applicable in respect of financial years commencing on or after 1st April, 2020. 

2. In the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 (herein after referred to as said rules), for rule 8A, the following shall be substituted as under:- 

"8A. Every private company which has a paid up share capital of ten crore rupees or more shall have a whole-time company secretary.". 

3. In the said rules, in rule 9 of the said rules, in sub-rule (1), (i) after clause (b), at the end the word "or" shall be inserted. (ii) after clause (b), the following clause shall be inserted, namely:- 

"(c) every company having outstanding loans or borrowings from banks or public financial institutions of one hundred crore rupees or more.". 

(iii) the following Explanation shall be inserted, namely:-

"Explanation:- For the purposes of this sub-rule, it is hereby clarified that the paid up share capital, turnover, or outstanding loans or borrowings as the case may be, existing on the last date of latest audited financial statement shall be taken into account.". 

[F. No. 01/05/2013-CL-V-Pt-I] 

(K.V.R. Murty)
Jt. Secy.

Note: The principal rules were published in the Gazette of India vide notification number G.S.R. 249(E), dated the 31st March, 2014 and lastly amended vide number G.S.R. 875(E), dated the 12th September 2018. 

FAQ :

These rules are applicable for financial years commencing on or after 1st April 2020.

Every private company with a paid-up share capital of ten crore rupees or more is now required to have a whole-time Company Secretary.

Yes, companies having outstanding loans or borrowings from banks or public financial institutions of one hundred crore rupees or more will also be subject to these rules.

The paid-up share capital, turnover, or outstanding loans or borrowings are determined based on the figures existing on the last date of the latest audited financial statement.

Rule 9(1) has been amended to include companies with outstanding loans or borrowings from banks or public financial institutions of one hundred crore rupees or more, alongside existing criteria.




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