Schedule XIII of the Companies Act, 1956 – Conditions to be fulfilled for appointment of a managing or whole time director or a manager without approval of Central Government – employee of a company holding shares of company up to 0.5% of paid up share capital also covered under category of persons not having any interest in capital of company
Notification [F. No. 14/11/2012-CL-VII], dated 16-8-2012
Sub: – Gazette notification GSR 534(E) dated 14/07/2011-clarification regarding
I am directed to refer to the Gazette Notification No. GSR 534(E) dated 15th July, 2011 whereby companies were exempted from obtaining the approval of the Central Government for payment of remuneration exceeding the limits imposed by the Companies Act, 1956 in respect of the managerial persons not having any interest in the capital of the company and not related to the directors or promoters thereof.
In this regard, a number of representations have been received from stakeholders pointing to the corporate practice of allocating shares by way of qualification shares and/or shares under any scheme for allotment of shares to the employees of the company including under Employees’ Stock Option Plan (ESOP).
It is hereby clarified that any employee of a company holding shares of the company up to 0.5% of paid up share capital thereof under any scheme formulated for allotment of shares to such employees including under Employees’ Stock Option Plan or by way of qualification shares are also covered under the category of persons not having any interest in the capital of the company in terms of the Ministry’s notification GSR 534(E) dated 14-7-2011.