Wednesday, 16 September 2015

DRAFT ICAI GUIDELINES ON MANAGERIAL REMUNERATION

Guidance on Managerial Remuneration under the Companies Act, 2013
Provisions Relating to Appointment:
Appointment of managing director, whole-time director or manager
  • Every listed company and every other public  company, including a subsidiary of a public company, having a paidup share capital of ten crore rupees or more is required to have whole-time key managerial personnel such as Managing Director, Chief Executive Officer or Manager or in the absence of these a Whole-time Director, a Company Secretary and Chief Financial Officer. However, a company cannot at the same time appoint or employ a Managing Director and Manager.
  • All companies including private companies, which has a paid up share capital of five crore rupees or more should have a whole-time company secretary.
  • Dual Appointments:
    • Any of these individuals are not eligible to be appointed / reappointed as the Chairperson as well as Managing Director or Chief Executive Officer at the same time unless
      • a) Articles of Association provides for such appointments and the company does not carry out multiple businesses                                                                                                                                                                                                                                                             or
      • b) Company carries on multiple businesses, such companies can have one or more Chief Executive Officers for such business. This may be, however as notified by the Central Government for certain class of companies.
      • In the case of multiple businesses, when the Central government permits certain class of companies engaged in such multiple businesses, to have more than one Chief Executive Officer, then the same person can be a Chairman as well as Managing Director or Chief Executive Officer.
  • A whole time key managerial personnel cannot hold office in more than one company at the same time except in the subsidiary company. If a person holds office in more than one company, within six months of the commencement of the Act, choose the company in which he wishes to continue as KMP
  • If the office of a KMP is vacated, the vacancy can only be filled up by appointing a person at a Board Meeting within six months of the date of such vacancy.

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