Section 314 of companies act, 1956

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

15 October 2013 In a public Ltd. company there are 5 Directors. 3 of them are executive directors. Two are non executive directors. One of non executive director wants to become an executive director. All of them are family members. They are drawing remuneration in excess of prescribed limits under Schedule xiii and company is having inadequate profits. No remuneration committee is constituted as no independent director is there in that company.

Now the problem is that Section II of Part II of Schedule XIII can not be followed as it requires remuneration committee’s approval.

Kindly guide how to comply with the provisions of Companies Act. Can shelter of Section 314 be taken in this case? Is it possible? If yes Kindly suggest the whole procedure of the same?

CS Ankur Srivastava

CS Ankur Srivastava (Expert)
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16 October 2013 Section 314 does not apply in this case.

CS Ankur Srivastava

CS Ankur Srivastava (Expert)
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16 October 2013 Under Schedule XIII Remuneration Committee means:

1. In respect of Listed Company a committee which consists of at least three non - executive independent directors including nominee director, if any

2. IN respect of any other Company, a Remuneration Committee of Directors.

Thus in your case Independent directors are not required to form a Remuneration Committee.

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Querist : Anonymous

Querist : Anonymous (Querist)

19 October 2013 Thanks Ankur..

Querist : Anonymous

Querist : Anonymous (Querist)

19 October 2013 Dear Ankur,

Kindly guide me on the this query too:

Schedule XIII is applicable on executive directors or not????

I have taken many opinions on the same from the learned Professionals. All are of different opinion. Some says it will be applicable while other says it will applicable only to WTD and MD for which we need to file form 25C.

I would also like to take your opinion on this.