Payment of remuneration to WTD of public co

This query is : Resolved

Guest

Guest (Querist)

12 March 2011 Dear friends / experts,

please see my query as follows :

ABC ltd has a WTD.

Query

1. Whether there is any restriction for
the period of appointment (say tenure is more than 5 years).

Ans : ..............

(Somewhere, I noticed that there is no restriction of tenure for WTD. Is it so)

2. Whether there is any restriction for
the payment of remuneration (say tenure more than 3 years).

Ans : ..............

3. How do we fill in Form 25C - whether payment details for the range of 3 years only or 5 years.

Ans : ..............

I shall wait for your views.

CS Janak

CS Janak (Expert)
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14 March 2011 Ans. to 1St Qn.: No there is no restriction for the tenure of appointment.

Ans. to 2nd Qn. : No there is no restriction but if not as per schedule XIII then you have to take Central Govt, Approval.

Ans. to 3rd Qn. : It has been specifically mentioned in the point 7 of Form 25C.

udit sharma

udit sharma (Expert)
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14 March 2011 1. A WTD can be appointed for a period of more than 5 years at a time.

2. As per the provisions of section 309(3) of the Companies Act, 1956 a MD or a WTD can be paid remuneration by monthly payment or by way of a fixed commission or partly by one way or other, provided:

in case there is only one such director, the remuneration shall not xceed 5 % of the net profits of the Company to be determined as per the provisions of section 349 & 350 and if there is more than one such director, 10% of the net profits of the Company.

Ans. 3 if the WTD is appointed for 3 years, then the respective payment details should be only mentioned.

God Bless

CS Udit Sharma

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Bhaskaran Chackrapani Warrier

Bhaskaran Chackrapani Warrier (Expert)
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14 March 2011 1. Section 317 of the Companies Act,1956 does not apply to the appointment of whole time director's. Therefore, there are no restrictions for the tenure of the appointment of whole time director's.
2. If appointed for more than three years remuneration should be fixed by way of special resolution. Refer Ntfn. GSR 36(E) dated 16/01/2002.
3. I didn't get the question. However, either monthly or yearly option can be selected and tenure as in 7(e).

Guest

Guest (Querist)

14 March 2011 Thanks a lot for the responses.

- - - - -

Still I have the following queries. Please see :

ABC Limited appointed WTD with the approval of shareholders for a period of 5 years with a total remuneration of Rs.46 Lacs, which is in accordance with Sch. XIII. (Company’s Effective Capital is more than Rs.100 Crores).

Request 1 :

I would like to know the relevant provisions or sections, which confirm that tenure for WTD’s appointment (in public company) has no restriction at all (while Section 317 is for MD not to be appointed for a period of more than 5 years).

Filing of Form 25C within 90 days from the date of appointment of WTD – This is clear. No doubt.

Query 1

In the notification dated 16.01.2002 referred above, there is a mention that

(iii) a special resolution has been passed at the general meeting of the company for payment of remuneration for a period not exceeding three years;

Here, I request to clarify my ignorance :

Appointment of WTD – 5 years.
Payment of remuneration – not exceeding three years.

Should the company again have the shareholders approval for the payment of remuneration for the last two years i.e. Year 4 and Year 5 ?

Ans :……………….

Whether any e-form is involved for the payment of remuneration for the said two years.

Ans :……………….

Please advise the common practice followed on such situation.

Thanks

Bhaskaran Chackrapani Warrier

Bhaskaran Chackrapani Warrier (Expert)
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14 March 2011 Sir
Regarding section 317, quote from Guide to Companies Act,by Sri. A.Ramaiya ,17th edition page 3081(6th para).
" It is also to be noted that this section does not apply to a whole time director,other than a managing director,so that the term of appointment of such whole time director need not be limited to a period of five years".

For the rest, my observation is reserved since I have not practically handled such a case leaving the query open for the expert comments of our club members.