SME Times News Bureau | 14 Sep, 2018
In a move that will add to ease of doing
business in the country, the Corporate Affairs (MCA) on Thursday said companies
will no longer require government approval to decide salaries of their
managerial staff.
"From September 12, 2018 approval of the Central Government shall no
longer be required for the payment of remuneration to managerial personnel (in
excess of 11 per cent of the net profit of a company)," the Ministry said
in a statement.
In a move designed to empower common shareholders, the remuneration in excess
of individual limits will now be approved by shareholders through a special
resolution.
"... the government has notified that remuneration in excess of individual
limits laid down for Executive and non-Executive Directors shall henceforth be
approved by shareholders through a Special Resolution," the statement
said.
The MCA notified commencement of changes to the Companies Act, 2013 along with
the rules as part of its policy of 'Minimum Government-Maximum Governance'. The
aim is to provide ease of doing business to the law-abiding corporates of the
country.
In case a company has defaulted in payment of dues to a bank, financial
institution or non-convertible debenture holder, a prior approval would be
required from the entity to which the company has defaulted before getting the
shareholders' approval.
The MCA said relevant changes have been made to Schedule-V of the Companies
Act, 2013 so that companies can follow provisions of Schedule-V and need not
take central government's approval when companies are in loss or have
inadequate profits.
"With the issue of the notification all pending applications submitted to
the Ministry for approval of proposals for payment of managerial remuneration
in excess of the limits laid down, would automatically abate and companies are
free to obtain requisite approvals for those proposals, from the shareholders
within one year," it added.