Amendment to Schedule V of the Companies Act., 2013

Last updated: 22 March 2021

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The Ministry of Corporate Affairs has amended Schedule V of the Companies Act, 2013, effective from 18th March 2021. These changes specifically update the 'REMUNERATION' section, Part II. The amendments clarify and expand the scope to include 'other director or directors' alongside 'managerial person or persons'. A new table (Table A) has been introduced, detailing the limits for yearly remuneration payable to both managerial persons and other directors based on the company's effective capital.

MINISTRY OF CORPORATE AFFAIRS

Dated: 18th March, 2021

S.O. 1256(E).- In exercise of the powers conferred by sub-sections (1) and (2) of section 467 of the Companies Act, 2013 (18 of 2013), the Central Government hereby makes the following amendments to Schedule V of the said Act, namely:—

2. In Schedule V of the Companies Act, 2013, in PART II, under the heading “REMUNERATION”. –

(a) in Section I, in the first para, after the words “managerial person or persons”, the words “or other director or directors” shall be inserted;

(b) in Section II,-‑

(i) after the words “managerial person”, wherever occurred, the words “or other director” shall be inserted;

(ii) for Table (A):, the following shall be substituted, namely.-

” A :

(1)		(2)	(3)
S1.No.	Where the effective capital (in rupees) is	Limit of yearly remuneration payable shall not exceed (in Rupess) in case of a managerial person	Limit of yearly remuneration payable shall not exceed (in rupees) in case of other director
⁽ⁱ⁾	Negative or less than 5 crores.	60 lakhs	12 Lakhs
(ii)	5 crores and above but less than 100 crores.	84 lakhs	17 Lakhs
(iii)	100 crores and above but less than 250 crores.	120 lakhs	24 Lakhs
(iv)	250 crores and above.	120 lakhs plus 0.01% of the effective capital in excess of Rs.250 crores:	24 Lakhs plus 0.01% of the effective capital in excess of Rs.250 crores:”

(i) after the words “managerial person”, wherever occurred, except in clause (i) of the proviso, the words “or other director” shall be inserted;

(ii) after the words “managerial persons”, wherever occurred, the words “or other directors” shall be inserted;

(iii) following explanation shall be inserted at the end, namely:-

“Explanation.- For the purposes of Section I, Section II and Section III, the term “or other director” shall mean a non-executive director or an independent director.”

File No. 1/5/2013-CL-V
(K.V.R. Murty)
Joint Secretary.

Note: The Schedule V of the Companies Act, 2013 came into force with effect from the 1^stApril 2014 and was last amended vide notification number S.O. 4822 (E) dated 12.09.2018 published in the Gazette of India.

FAQ :

The amendment aims to update the remuneration limits and guidelines for both managerial persons and other directors, as specified in Schedule V of the Companies Act, 2013.

For the purposes of Sections I, II, and III of Schedule V, an 'other director' is defined as a non-executive director or an independent director.

The amended Schedule V introduces Table (A) which outlines the limits for yearly remuneration payable to managerial persons and other directors, based on the company's effective capital, ranging from negative or less than 5 crores up to 250 crores and above.

These amendments were made on 18th March 2021.

Yes, for companies with effective capital of 250 crores and above, the yearly remuneration limit for both managerial persons and other directors includes 24 Lakhs plus 0.01% of the effective capital in excess of Rs.250 crores.

Notification No : S.O. 1256(E)
Source : http://www.mca.gov.in/Ministry/pdf/AmendmentNotification_19032021.pdf

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