MCA notifies amendment in Section 149(9) (Remuneration of Independent Director In case of absence or inadequate profits) & 197 (Overall Maximum Managerial Remuneration and Managerial Remuneration in Case of Absence or Inadequacy of Profits) of Companies Act 2013 by notifying section 32 & 40 of Companies Amendment Act, 2020 with effect from 18.03.2021.
A. Amendment of section 149(9) of Companies Act , 2013 related to ‘Remuneration of Independent Director In case of absence or inadequate profits’ vide Section 32 of Companies (Amendment) Act, 2020 with effect from 18.03.2021. Text of the amendment is as follows:-
32. Amendment of section 149.
In section 149 of the principal Act, in sub-section (9), the following proviso shall be inserted, namely:—
“Provided that if a company has no profits or its profits are inadequate, an independent director may receive remuneration, exclusive of any fees payable under sub-section (5) of section 197, in accordance with the provisions of Schedule V.”.
Our Comment – This proviso will allow the Independent Director to take remuneration in case of no profit or inadequate profit as per Schedule-V.
B. Amendment of section 197 of Companies Act , 2013 related to ‘Overall Maximum Managerial Remuneration and Managerial Remuneration in Case of Absence or Inadequacy of Profits’ vide Section 40 of Companies (Amendment) Act, 2020 with effect from 18.03.2021. Text of the amendment is as follows:-
40. Amendment of section 197.
In section 197 of the principal Act, in sub-section (3), after the words “whole-time director or manager,”, the words “or any other non-executive director, including an independent director” shall be inserted.
Our Comment- Included independent director so as to give effect to the amendment made in section-149(9).
Also Read–Remuneration Limit for non-executive/independent director notified
Full Text of the Notification is as follows:-
Government of India
Ministry of Corporate Affairs
New Delhi
Notification No. S.O.1255(E)
Dated: 18th March, 2021
S.O.1255(E).- In exercise of the powers conferred by sub-section (2) of section 1 of the Companies (Amendment) Act, 2020 (29 of 2020), the Central Government hereby appoints the 18th March, 2021 as the date on which the provisions of section 32 and section 40 of the said Act shall come into force.
[File No. 1/3/2020-CL.I]
( K.V. Murty)
Joint Secretary to the Government of India
