Mitali Agarwal (Company Secretary) (638 Points)
13 February 2010Dear Professional Friends,
A remuneration commitee was constituted in a public ltd. unlisted co. after the end of F.Y. 2008-09, when it was found that the remuneration packages paid to executive directors during 2008-09 will have to be approved by the remunration Committee (inadequate profits).
Now, whether is it correct in the eyes of law for the committee to approve the packages already paid and to be paid in future?
CS Ankur Srivastava
(Company Secretary & Compliance Officer)
(17853 Points)
Replied 13 February 2010
Dear Mitali,
As per schedule XIII Part II and Section II where in any financial year during the currency of tenure of the managerial person, a company has no profits aor its profits are inadequate, it may pay remuneration to a managerial person by way of salary, dearness allowance, perquisites and any other allowances as per the table mentioned therein. Provided that the payment of remuneration is approved by a resolution passed by the Remuneration Committee.
The above approval is necessary for the current remuneration to the managerial persons.
In my opinion, approval may be granted for the packages to be paid i.e. current and furure but not for that Already Paid by the committee.
Contrary views are welcome.
Sushil Upadhyay
(Manager-Accounts)
(45 Points)
Replied 20 May 2010
Dear Friends,
A remuneration commitee was constituted in my company which is subsidiary of listed company abroad, because of this we have to follow all the compliances applicable to lsited company, require a Minutes of remuneratoion committee, please help!!!!!
Deepak Maharishi
(CS)
(514 Points)
Replied 20 May 2010
Dear Mitali,
I agree with Mr. Ankur that the approval of remuneration committee relates with prospective payment of remuneration and not for restrospective payment.
Regards
Deepak Maharishi
Mitali Agarwal
(Company Secretary)
(638 Points)
Replied 21 May 2010
But what if we were not aware that we will have inadequate profits in this year?
Means we have paid remuneration to WTDs for F.Y. 2008-09 as we had sufficient profits in 2007-08.
But after compilation of accounts of 2008-09, we came to know that profits of 2008-09 were inadequate to pay remuneration for 2008-09, but the remuneration was already paid.
Now what should be the next step??
Deepak Maharishi
(CS)
(514 Points)
Replied 21 May 2010
In such case section 309(5B) comes into picture which says the approval of central government is required for waiver of recovery of excess remuneration paid to the managerial personnels.
Accordingly, there should be a resolution of remuneration committee, Shareholders resolution and then application to central government through Form 25A for waiver of recovery of excess remuneration paid.
Thanks and regards
Deepak Maharishi
ars
(CS)
(445 Points)
Replied 21 May 2010
Dear Mitali,
The remuneration committe can not approve on a later date the salary package of the directors.
The sch.XIII specifies the upper limit under each category. u may pass a res. for appt. and for the payt. of remuneration as "up to Rs.__" ( the max. provided in sch.) . hence u can pay the desired salary depending upon the perfomace till the expiry of the appoinrment.
In case u desired to pay more than the limit under sch.XIII, pass a sp. res. and apply to C.G.
CAclubindia
