MCA empowers shareholders in deciding managerial remuneration in excess of limits laid down

The Corporate Affairs Ministry (MCA) has empowered the common shareholders of a company for deciding the managerial remuneration beyond the laid down individual limits.

The Centre’s approval will not be required (from September 12) for payment of managerial remuneration in excess of 11 per cent of the net profit of a company. Approval by shareholders through a special resolution would suffice, the MCA said in an official release.

For this purpose, the MCA has notified the commencement of important amendments to the Companies Act, along with the rules. However, the MCA has stipulated that where a company has defaulted in payment of dues to any bank/ financial institution or non-convertible debenture holder or any other secured creditor, their prior approval would be required before placing the matter for consideration and approval in the general meeting of the shareholders.

Also, relevant changes have been made to Schedule V of the Companies Act, whereby, in case of loss or inadequacy of profits, remuneration can be paid only in accordance with the provisions of Schedule V and no approval of the Central Government would be required, the release added.

All pending applications submitted to MCA for approval of proposals for payment of managerial remuneration in excess of the limits laid down would automatically abate, and companies are free to obtain requisite approvals for those proposals from shareholders within one year, the MCA has said.

Srivats.kr@thehindu.co.in

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