Financial Daily from THE HINDU group of publications
Saturday, Jan 19, 2002
Financial Daily from THE HINDU group of publications Saturday, Jan 19, 2002 |
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Regulatory Bodies & Rulings Corporate - Regulatory Bodies & Rulings DCA amends salary norms for loss-making cos Richa Mishra
NEW DELHI, Jan. 18 THE Government has relaxed the norms governing managerial remuneration payable by companies that make inadequate or no profits. Corporates in this category can now pay their managers a monthly remuneration of up to Rs 4 lakh per month. The Department of Company Affairs (DCA), which has notified the new norms, has allowed remuneration committees set up by companies to approve the higher remunerations provided they are in conformity with the new ceiling limits. In essence, the Government is foregoing its powers to regulate salary packages for managerial personnel in companies in favour of the shareholders. According to Government officials, close to a third of domestic corporates need not approach the DCA for such approvals, thanks to the amendments to Schedule XIII carried out in the Companies Act. However, the easing of norms comes with a caveat. Companies which have defaulted on repayment of debts - including public deposits or debentures or interest thereon - for a continuous period of 30 days in the preceding financial year before the date of appointment of such managerial personnel will not be eligible to take advantage of these new norms. As per the amendments, in the scale prescribed for the ceiling limit not exceeding Rs 24 lakh per annum, a new slab of has been introduced in the case of companies with effective capital of Rs 50 crore or more but less than Rs 100 crore. In such cases, the monthly remuneration payable may not exceed Rs 1.75 lakh. Further, `remuneration committee' has been defined as a committee consisting of at least three non-executive independent directors including nominee director or nominee directors, if any. No changes in the managerial remuneration have been made with respect to companies making profits.
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