Can anybody tell me the procedure to follow to increase the remuneration of an MD, who is a foreign national. His remuneration is more than Rs. 50 lakhs. Moreoevr, his appointment is pending approval before the CG
6 Replies
Pavan Jain S
(Chartered Accountant)
(1575 Points)
Replied 12 June 2009
since the MD is a foreign national, the increase in remuneration cannot be under schedule XIII. Prior approval of the CG is required to increase. Since the original approval is pending, you cannot effect an increase
Surbhi Jain
(Service)
(68 Points)
Replied 12 June 2009
Thanks a lot for your response.
But i do not see any such restriction in Schedule XIII. Can you please specify the source on the basis of shich you are saying this
CS Ankur Srivastava
(Company Secretary & Compliance Officer)
(17853 Points)
Replied 12 June 2009
Dear Surbhi,
You can only increse the remuneration if the appointment is approved otherwise what is the mean of increasing the remuneration. However, you can obtain the approval of Central Government for both purpose at a same time. But as you already mention that the approval is pending, increase in remuneration can only be made after obtaining the approval.
Ajay Mishra
(Company Secretary)
(74337 Points)
Replied 13 June 2009
Dear Ms. Surabhi
As u says:
1. The Company appointed Managing Director who is foreign national.
2. His appointment was made in accordance with Government approval.
3. Central Government approval is pending.
If i read ur above question, i think until and unless the cental government not approved the appointment of foreign national MD, u can not take the next step of increasing their remuneration.
Regards
CS Ankur Srivastava
(Company Secretary & Compliance Officer)
(17853 Points)
Replied 13 June 2009
Absolutely,
Otherwise you can apply both for appointment and remuneration at the same time with Central Government.
But once appointment is pending, how can you increase remuneration which also need the Central Government Approval, despite of the fact that that appointment is also not approved.
Pavan Jain S
(Chartered Accountant)
(1575 Points)
Replied 17 June 2009
Hi Surbhi,
There are certain pre conditions for applicability of schedule XIII of the Companies Act. Amongst them, one of the condition is that the appointee must be a resident in India,i.e., a person who has been staying in India for a continuous period of not less than 12 months immediately preceding the date of appointment as a managerial person and who has come to stay in India for taking up employment in India.
Further, as per section 310 and 311 of the Act, an increase in remuneration of MD has to be made only after prior approval of CG or else in accordance with the provisions of Schedule XIII. If your company is a profitable one and the MD satisifies the criteria of Schedule XIII [Which is presume he is not, so only application for approval of his appointment has been made], the increase can be made subject to the limits specified by section 198 and 309 of the companies Act without the approval of CG.
IF the very appointment is pending approval, there is no question of effecting increase without the approval.
Hope I Clarified your position
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