Brief of Section 196, 197 & Schedule-V of Companies Act, 2013

Sponsored

Brief of Section-196, 197 and Schedule-V of the Companies Act, 2013

Section-196-MD/WTD/MGR
S. No.	Particulars
1.	MD/WTD/Manager-Age Limits	Min-21 Years Max-70 Years Above 70 years by passing SPECIAL RESOLUTION (SR)
2.	MD/Manager, both can’t be appointed at the same time	–
3.	Appointment of MD/WTD/Manager	Form MR-1 within 60 days
4.	Appointed by BR subject to approval at next GENERAL MEETING	–
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

–

Section-197-Applicable only on PUBLIC COMPANY
S. No.	Particulars	Limits	If Limits Exceed
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
2.	One MD/WTD/Mgr	Not exceeding 5% of N.P.	SPECIAL RESOLUTION (SR)
3.	2 or more MD/WTD/Mgr	Not exceeding 10% of N.P.
4.	Any other Director (if MD/WTD/Mgr is appointed in the Company)	Not exceeding 1% of N.P.
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.

SCHEDULE V
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:

> 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.