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Brief of Section-196, 197 and Schedule-V of the Companies Act, 2013
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Section-196-MD/WTD/MGR |
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S. No. |
Particulars |
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1. |
MD/WTD/Manager-Age Limits | Min-21 Years
Max-70 Years Above 70 years by passing SPECIAL RESOLUTION (SR) |
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2. |
MD/Manager, both can’t be appointed at the same time | – |
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3. |
Appointment of MD/WTD/Manager | Form MR-1 within 60 days |
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4. |
Appointed by BR subject to approval at next GENERAL MEETING | – |
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5. |
In case of Private Company – appointment of MD/WTD/Mgr can be done by- | Board Resolution and no need to File form MR-1 |
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Section-197-Applicable only on PUBLIC COMPANY |
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| S. No. | Particulars | Limits | If Limits Exceed |
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1. |
ALL Directors including MD/WTD/Mgr | Not more than 11% of N.P. of a F.Y. | However, more than 11% can be paid at General Meeting, subject to Schedule V |
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2. |
One MD/WTD/Mgr | Not exceeding 5% of N.P. |
SPECIAL RESOLUTION (SR) |
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3. |
2 or more MD/WTD/Mgr | Not exceeding 10% of N.P. | |
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4. |
Any other Director (if MD/WTD/Mgr is appointed in the Company) | Not exceeding 1% of N.P. | |
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5. |
Any other Director (if NO MD/WTD/Mgr is appointed in the Company) | Not exceeding 3% of N.P. | |
Important Notes under Section-197
- NO PROFIT OR INADEQUATE PROFIT IN THE COMPANY = REFER SCHEDULE V
- Sitting Fees shall not exceed 1 Lakh for each meeting, for Independent or Women Director also.
- Company can’t waive of the recovery of any sum from any director, unless SR is passed within 2 years from the date of sum become refundable.
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SCHEDULE V |
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| Capital | Yearly Remuneration shall not exceed
(in case of Managerial Person) |
Yearly Remuneration shall not exceed
(in case of Other Director) |
| Negative or < 5 Crores | 60 Lakhs | 12 Lakhs |
| 5 Crores or < 100 Crores | 84 Lakhs | 17 Lakhs |
| 100 Crore or < 250 Crores | 120 Lakhs | 24 Lakhs |
| 250 or more | 120 + 0.01% of the capital in excess of 250 Cr. | 24 Lakhs + 0.01% of the capital in excess of 250 Cr. |
| IN EXCESS OF AFORESAID LIMITS = SR | ||
Important Notes under Schedule V:
- Payment of the remuneration should be:
> approved by BR or NRS Committee, if any
> Ordinary Resolution (if within limits)
> SR (if limits exceeds)
- Shareholders approval should be valid for 3 Years only.
- Certificate from the Auditor/CS/CS in Practice should be obtained about the compliance of SCHEDULE -V.
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