The Hindu Business Line : Curbs on access to salary details of IT cos' overseas staff

IN a major relief to information technology sector, the Ministry of Company Affairs (MCA) has said that the access to information furnished by such companies to the Registrar of Companies (RoCs) on onsite staff salaries would be restricted to agencies such as the Revenue Department of the Government.

In effect, companies can now disclose the salaries of employees posted overseas without the fear of it being accessed by the competitors, which was the main concern of the industry.

This move by the Ministry comes close on the heels of it granting a regulatory relief to the sector by exempting such companies from disclosing in their annual reports, the remuneration particulars of the employees posted overseas. The exemption is, however, available only in respect of those employees who earn more than Rs 24 lakh in a financial year, and provided they are not directors or their relatives.

The companies, however, were required to submit the details of remuneration paid to disclosure-exempted employees to the RoCs. Further, a shareholder of the company can seek such information at an annual general meeting in which the remuneration is considered.

According to official sources, "The industry need not worry as only Government agencies would have access to the information furnished with the RoCs. Further, the RoCs have been asked to maintain the information for a specified period then it can be destroyed."

Regarding what prompted the Ministry to take such a decision, sources said, "The National Association of Software and Services Companies (Nasscom) had brought this to our notice. A section of the industry had expressed reservations about this requirement prescribed by the MCA arguing that the competitors could easily access the information from the RoCs. Therefore, after examining the representation the decision was taken."

In fact, this exemption from disclosures in the annual report (as an annexure to the Directors' Report), which is meant to help the IT companies in retaining their high-flying employees, was given based on the representations made by Nasscom. The argument given by the industry was that the disclosure leads to poaching of talent as competitors are aware of the remuneration being offered.

For the purpose of attaining what would constitute IT activities, the Ministry has adopted the explanation provided for such activities in the Securities & Exchange Board of India Investor Protection Guidelines. 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.

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Curbs on access to salary details of IT cos' overseas staff