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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:

  • 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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