Section 641 of the Companies Act, 1956 – Schedules forms and rules – Power to alter Schedules – Amendment in Schedule XIII – Approval of Government in case of listed company where not required
After removing requirement of approaching Central Government for Managerial Remuneration by Public Companies which are not subsidiaries of Listed Company, MCA has further simplified the requirements of Schedule XIII. Vide Notification NO. G.S.R. 396(E) dated 23 May 2011, MCA has allowed the subsidiaries of Listed Companies to fix managerial remuneration subject to following conditions and has dispensed with requirements of Central Government approval:
The Remuneration Committee and Board of Directors of Holding Company approve the remuneration and the said remuneration is considered as remuneration paid under Section 198 by the Holding Company;
The Remuneration is approved by shareholders of Holding Company in general meeting;
The remuneration shall be deemed to be paid by the Holding Company and
All members of subsidiary are Body Corporates.
Further, managerial remuneration approved by BIFR has been exempted from applicability of Schedule XIII.
SECTION 641 OF THE COMPANIES ACT, 1956 – SCHEDULES FORMS AND RULES – POWER TO ALTER SCHEDULES – AMENDMENT IN SCHEDULE XIII – APPROVAL OF GOVERNMENT IN CASE OF LISTED COMPANY WHERE NOT REQUIRED
NOTIFICATION NO. G.S.R. 396(E), DATED 23-5-2011
In exercise of the powers conferred by sub-section (1) of section 641 of the Companies Act, 1956, the Central Government hereby makes the following further amendments in Schedule XIII of the Companies Act, 1956, namely :—
1. In Schedule XIII, in Part II, in section 2-
(i) in sub-paragraph (C), after fourth proviso, the following proviso shall be inserted, namely :-
“Provided further that approval of the Central Government is not required for a subsidiary of a listed company, if-
1. The Remuneration Committee and board of directors of the holding company give their consent for the amount of remuneration of the applicant and for the said amount to be deemed as remuneration paid by the holding company for the purpose of section 198 of the Companies Act, 1956 ;
2. The remuneration of the applicant is approved by the holding company in the general meeting ;
3. If the remuneration of the applicant is deemed to be remuneration paid by the holding company ; and
4. All the members of the subsidiary are bodies corporate :
Provided that a listed company or a subsidiary of a listed company shall not require the Central Government approval for payment of remuneration to its managerial personnel, if the remuneration is fixed by the Board for Industrial and Financial Reconstruction.”
2. It shall come into force from the date of its publication in the Official Gazette.