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Richa Mishra

New Delhi , Feb. 25

INFORMATION technology companies may soon suffer lesser hiccups on disclosure requirements of remuneration to their employees posted overseas. The Department of Company Affairs (DCA) is likely to exempt the IT companies from furnishing such details as is presently required under the Indian Company Law.

Finance Ministry sources told Business Line that companies registered with the National Association of Software and Services Companies (Nasscom) have been pressing that there should be no requirement for such disclosures. The argument given by the industry is that this leads to poaching of the talent as the competitors know how much remuneration is being offered.

The proposed relief is, however, would not be applicable to the senior managerial personnel and directors' relatives. Law Ministry is now vetting the matter, sources said.

On how the Government proposed to define senior managerial personnel, sources said, "We have taken shelter under definition prescribed by the capital market regulator, Securities & Exchange Board of India (SEBI). That is as defined under Corporate Governance Code."

Section 217 (2A) of the Companies Act, 1956 stipulates that the Board of Directors' report shall also include a statement showing the details of employees in receipt of remuneration prescribed in the rule.

In fact, a DCA sub-committee of the Company Law Advisory Committee examining the issue had also recommended that there should be no requirement for disclosure of remuneration for employees posted overseas other than senior managerial personnel such as Executive Directors and one level below the board, as defined in the Corporate Governance Code.

The sub-committee had further stated that disclosure would also have to be made for those employees who receive remuneration that is more than that of a managing director or a whole-time director. In case of relatives of directors also, disclosure was mandated.

Although the sub-committee had recommended that there should be no distinction between different industries when granting such exemptions, the Department has at present decided to grant such a relief to only IT companies.

Further, the Companies (Amendment) Bill, 2003, had also proposed that "the Central Government may exempt, a class or classes of companies whose employees are posted outside India in connection with employment in that company, from including in the statement the remuneration of every such employee other than a relative of a director of such a committee."

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