MCA vide its notification dated 30th June, 2016 and in exercise of the powers confined by sub-sections (1) and (2) of section 469 of the companies Act,2013 (18 of 2013), amended the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014.
This Article is a detailed analysis of the Amendment notified.
|Companies (Appointment and Remuneration of Managerial Personnel) Rules,2014||Companies (Appointment and Remuneration of Managerial Personnel) Amendment Rules, 2016||Comment|
|RULE 3:||Omission of terms “Chief Executive Officer (CEO), Company Secretary and Chief Financial Officer (CFO)”||Now there is no need to file return of appointment of a Chief Executive Officer (CEO), Company Secretary and Chief Financial Officer (CFO)within sixty days of the appointment, with the Registrar in Form No. MR.1.
Filing of MR 1 for CS, CFO & CEO seemed to be an unnecessary requirement and created lot of confusion and multiple filing requirements for appointment of CS, CFO & CEO. So, finally the same has now been removed and any appointment of CS, CFO & CEO made on or after 30th June, 2016 will not require filing of e-Form: MR -1.
|Sub-Rule (1) –
Omission of clauses (v), (vi), (vii) and (ix) to (xi)” in sub-rule (1) relating to Disclosures in Board’s report.
In Sub-Rule (2) –
For the words “the name of every employee of the company, who-“
the words.. “the names of the top ten employees in terms of remuneration drawn and the name of every employee, who-” shall be substituted.
The board’s report shall include a statement showing the name of every employee of the company, who the names of the top ten employees in terms of remuneration drawn and the name of every employee who:
Ø in sub-clause (i) for the words “sixty lakh rupees”, the words “one crore and two lakh rupees” shall be substituted;
Ø in sub-clause (ii) for the words “five lakh rupees per month” the words “eight lakhs and fifty thousand rupees per month” shall be substituted;
|Now there is no requirement to disclose the following in the Board’s Report:
Ø Explanation of relationship between average increase in remuneration and company performance.
Ø Comparison of the remuneration of the Key Managerial Personnel against the performance of the company.
Ø variations in the market capitalization of the company.
Ø Comparison of each remuneration of the Key Managerial Personnel against the performance of the Company.
Ø The key parameters for any variable component of remuneration availed by the directors.
Ø The ratio of remuneration of the highest paid director to that of the employees who are not directors but receive remuneration in excess of the highest paid director during the year.
Ø Now the need to disclose name of top 10 employees in Board Report has been enhanced to monthly salary of Rs 8.5 lakhs.
Though the amendments have now been made but they do not seem to provide any relief to the companies this year as most of the companies have already approved their Board’s Report. So, the changes will be beneficial from next year onwards.
Ø The board’s report shall include the names of the top ten employees in terms of remuneration drawn and the name of every employee, who-
If employed throughout the financial year, was in receipt of remuneration for any part of that in the aggregate, was not less than 1 crore and 2 lakh rupees (earlier it was Sixty Lakh rupees).
Ø If employed for a part of the financial year, was in receipt of remuneration for any part of that year, at a rate which, in the aggregate was not less than Eight Lakh and Fifty Thousand rupees per month (earlier it was Five Lakh rupees per month).
♣ The statement referred to in sub-rule (2) shall also indicate –
(i) Designation of the employee: Designation as on end of the financial year needs to be mentioned here.
(ii) Remuneration received: Amount received by the employee during the financial year
(iii) Nature of employment: whether contractual or otherwise;
(iv) Qualifications and experience of the employee: Details to be provided as on End of F.Y.
(v) Date of commencement of employment: As per the appointment letter of the employee.
(vi) the age of such employee: Age as on end of F.Y as per the records maintained by the company.
(vii) The last employment held by such employee before joining the company: Name of the Last Organization the employee served along with details such as his past Designation & Remuneration.
(viii) The percentage of equity shares held by the employee in the company within the meaning of clause (iii) of sub-rule (2) above; and
(ix) Whether any such employee is a relative of any director or manager of the company and if so, name of such director or manager.
The changes above are surely welcome change but timing seems to be late as most of the companies have already approved their Board reports thus companies won’t be able to implement the changes this year.
Author: CS Rahul Harsh, is a Company Secretary from Kolkata and can be contacted at: firstname.lastname@example.org