The Hindu Business Line : IT cos need not show overseas staff pay in annual report

In a major regulatory relief for the sector, the Department of Company Affairs (DCA) has formally exempted IT companies from disclosing in their annual reports, the remuneration particulars of employees posted overseas.

The exemption would, however, be available only in respect of those employees who earn less than Rs 24 lakh in a financial year.

However, the companies would be required to submit the details of remuneration paid to disclosure-exempted employees to the Registrar of Companies (RoCs).

According to official sources, the exemption from disclosures in the annual report (as an annexure to the directors' report) would help the IT companies in retaining their high-flying employees.

The DCA move has been prompted by the representations made by the National Association of Software and Services Companies (Nasscom), which said that there should be no requirement for such disclosures.

The argument given by the industry is that this leads to poaching of talent as competitors are aware of the remuneration being offered.

Even though the company need not disclose the remuneration details in the directors' report, a shareholder of the company can seek such information at an annual general meeting (AGM) in which the remuneration is considered.

Further, official sources told Business Line that the Department would notify the format in which the company should file the details to the RoCs later.

For the purpose of attaining what would constitute information technology (IT) activities, the Department has decided to go by the explanation provided for IT activities in the Securities & Exchange Board of India (SEBI) Investor Protection Guidelines.

Section 217 (2A) of the Companies Act, 1956, stipulates that the Board of Directors' report shall also include a statement showing the details of employees in receipt of remuneration prescribed in the rule.

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