Muralidharan (Self Employed) (1034 Points)
20 May 2009Dear Members
Kindly clarify whether the Managing Director of a Company will be termed as Employee of the Company within the meaning of Section 217(2A) of the Companies Act, 1956.
(Note : My company MD is drawing remuneration in excess of Rs.2.00 lacs per month [24.00 lacs per annum]. I want to know whether the details of his remuneration need to be included with the Directors Report.
with regards
Muralidharan
P C Agrawal
(Registered independent director Past Chairman of Aurangabad Chapter of ICSI Practicing Company Secretary at Aurangabad)
(8229 Points)
Replied 21 May 2009
Yes pl.
CS Ankur Srivastava
(Company Secretary & Compliance Officer)
(17853 Points)
Replied 16 July 2009
Whether Whole time Directos of the Company are employee u/s 217(2A)?
kamaljeet
(C.S)
(51 Points)
Replied 16 July 2009
No the Managing Director is not a employee of the Company under Section 217(2A) of the Companies Act, 1956.
Malav Shah
(Company Secretary and AVP Legal)
(171 Points)
Replied 16 July 2009
Yes, MD is an employee of the Company. Many companies give this details in their report. Please check report of Infosys.
CS Ankur Srivastava
(Company Secretary & Compliance Officer)
(17853 Points)
Replied 17 July 2009
Dear Malav,
This is not the valid reason, many Companies also not give such details.
Neither Managing Director nor Whole Time Directors are employee of the Company,.
In my opinion the details of MD and WTD are not required to give under section 217(2A) as such they are not the employee of the Company under the Companies Act. Moreover the under schedule VI the details of the managerial remuneration are required to give seperately, thus why we give same detail at two places.
Further, section 217(2A) also applies to the employees whose salary is less than Rs. 24 lacs per annum if their salary exceeds the salary of MD, WTD and Manager.
Ajay Mishra
(Company Secretary)
(74337 Points)
Replied 17 July 2009
Dear Mr. Murlidharan
Yes, details of MD other employee required to be discloseed under section 217(2A) of the Companies Act, 1956 read with Companies (Particulars of Employees) Rules, 1975 who drawing remuneration in excess of Rs.2.00 lacs per month [24.00 lacs per annum].
CS Ankur Srivastava
(Company Secretary & Compliance Officer)
(17853 Points)
Replied 18 July 2009
Dear All,
In my opinion MD and WTD are not the employees of the Company, they are the Directors of the company and being a director they have entrusted some additional responsibilities and liabilities, so how can we categorised a director of company as a employee.
Their are separate provisions for the remuneration of MD or WTD or Manager and also shows separetaly.
Under section 217(2A) the particulars of employees whose salary exceeds Rs. 24 Lacs per annum or 2 Lacs per month are required to be disclosed (as per clause i and ii) and clause iii the details of such employees are required to be given whose remuneration is more than the remuneration of MD or WTD or Manager.
Thus according to me the details of WTD and MD should not be shown under section 217(2A).
Please correct me if i am wrong.
Ankur Garg
(Company Secretary and Compliance Officer)
(114773 Points)
Replied 18 July 2009
Agree with Mr. Malav
The remuneration given to the MD being a contractual employee should be given in the board report u/s 217 (2A) if the remuneration exceeds the prescribed limits.
However in response to an old corporate query Deptt expressed contrary view. But it was just a view and doesn't have the force of law in the form of DCA Circular/Notification.
Regards
Ajay Mishra
(Company Secretary)
(74337 Points)
Replied 18 July 2009
Hi
I think this attachment will help you on the above matter.
Regards
reshmi
(CS- Final Student)
(33 Points)
Replied 04 August 2009
Managing Director is not an employee of the company, within the maning of section 217 (2A)
Priyanka
(CS)
(141 Points)
Replied 13 August 2009
Dear All,
As per Ramaiya Commentary, it has been cleary specified that Managing Director is not an employee of the Company but Companies as a part of Good Corporate Governance, give detials of the remuneration of MD, ED, WTD.
Priyanka
KINNARI SHAH
(COMPANY SECRETARY)
(73 Points)
Replied 27 August 2011
Under section 217(2A) of the Companies Act, 1956, the details of employees like name, designation, remuneration, qualification, date of employment, and last employment held etc. has to be disclosed in Directors Report of the Company if,
(1) Employee, employed during the whole year and was in receipt of remuneration of Rs. 24 Lakhs and above.
(2) Employed for part of the year, and was in receipt of remuneration of Rs. 2 lakhs p.m. and above.
(3) Employed for whole year or part of the year and was in receipt of the remuneration more than the Managing Director or Whole Time Director or Manager
and holding 2% or more of equity Shares of the company in his name or any of his/her relatives.
Remuneration will here means all the Expenses borne by the Company including retirement benefits (Means you can say CTC of the Company).
Abishekjain
(Ca Final Student)
(241 Points)
Replied 02 October 2011
Is there any amendment for Sec 217(2A). Jayaraman Sir told it got change i.e. 60l pa and 5l pm. pls clarify from when and the details of amendment if any.
CAclubindia
