No More Government Approval For Managerial Remuneration

  • Admin
  • 06 Mar, 2020

Ministry of Corporate Affairs (MCA) vide its notification dated 12th September 2018 had provided a major relief to Companies willing to pay managerial remuneration beyond the threshold limits as per provisions of Companies Act, 2013.

The said change has been introduced by making Section 67 of Companies (Amendment) Act, 2017 effective with effect from 12th September 2018. Section 67 of Companies (Amendment) Act, 2017 corresponds to Section 197 of the Companies Act, 2013 which deals with overall maximum managerial remuneration of a Company in a financial year.

Till 11th September, 2018 all Public Companies were required to seek approval of Central Government for payment of managerial remuneration in excess of 11% of net profits of the Company or where the Company is having inadequate profits or loss.

As an attempt to promote Shareholder's democracy and to discourage the involvement of Government in internal decisions of Company, government approval has been lifted and with effect from 12th September, 2018 there is no requirement to seek approval of Central Government and payment can be made with approval of Shareholders by way of passing a special resolution.

With this move, it seems all pending applications for approval as lying with MCA would be considered as abated with the commencement of Section 67 of Companies (Amendment) Act, 2017.

For MCA notification please click below links

Corpcode Consulting LLP

Share Your Thoughts