CS Mohit Saluja
Ministry of Corporate Affairs has recently released Chapter XIII- The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014. The rules are different from draft rules given for comments in respect of appointment of Key Managerial Personnel (KMP) and Secretarial Audit limit.
Kill two birds with one stone or say “Ek teer se do Shikar”
One Stone: Share Capital Limit for Secretarial Audit Limit been reduced to Rs. 50 crores as against Rs. 100 Crores proposed in Draft Rules
Two Birds: (i) KMP appointment limit increased to Rs. 10 crores as against 5 Crores in Draft Rules, (ii) Private Companies Exempted from appointment of KMP as against draft rules where it was applicable on every other company.
Just before the day comes to an end, Last rules under Chapter XII had been notified by the MCA with respect to Appointment of KMP and Secretarial Audit, which was eagerly waited by Every Company Secretary in Practice or in Job. Following is the criteria for KMP and Secretarial Audit.
Appointment of KMP (Section 203(1))
1. Share Capital Limit for KMP: Rs. 10 crore or more in Public Limited Companies. The limit has been increased from 5 crores as given in Draft Rules. Bad news for CS in employment.. Where there is no requirement to have KMP for Private Limited Companies as per rules notified where draft rules had prescribed for every company.
2. Mandatory for Listed Companies
Extract from Rules:-
“8. Appointment of Key Managerial Personnel.-
Every listed company and every other public company having a paid-up share capital of ten crore rupees or more shall have whole-time key managerial personnel.”
Secretarial Audit (Section 204(1))
1. Applicable on Public Limited Companies Only: Share Capital Limit has been reduced from Rs. 100 Crores (Rs. 100 cr was stated in Draft Rules) to Rs. 50 Crores where as Turnover Criteria has also been given i.e. if turnover is more than 50 cr, the Secretarial Audit will be applicable.
2. Hence, Capital > Rs. 50 Crores or Turnover > Rs. 250 Crores, Secretarial Audit will be applicable. Good News for CS in Practice (it is the other fact that pre-certification has been removed from a no. of E Forms.) that the limit has been reduced so far although many of us wanted it to be applicable on every company having paid up capital more than Rs. 10 Lakh
3. Mandatory for Listed Companies
Extract from Rules:-
“9. Secretarial Audit Report.- (1) For the purposes of sub-section (1) of section 204, the other class of companies shall be as under-
(a) every public company having a paid-up share capital of fifty crore rupees or more; or
(b) every public company having a turnover of two hundred fifty crore rupees or more.
(2) The format of the Secretarial Audit Report shall be in Form No. MR.3.”
CS Mohit Saluja, Mohit Saluja & Associates, 2nd Floor, Malhotra Complex, Sehdev Market, Jalandhar City, M- 9914558709, firstname.lastname@example.org