Conditions for appointment of managing/whole-time Director, etc. - Companies Law - Circular: No. 8 of 1993,

Circular: No. 8 of 1993, dated 27-7-1993. Subject:- Conditions for appointment of managing/whole-time Director, etc. - Amendment of Schedule XIII with effect from 14-7-1993 I am directed to say that the revised Schedule XIII to the Companies Act, 1956 (1 of 1956), has been notified by the Central Government in the Gazette of India, Extraordinary on 14th July, 1993, and has become effective from the date of its notification. Appointment and remuneration of managing/whole-time directors and managers from the date of notification of revised Schedule XIII will be regulated by the provisions of revised Schedule XIII. However, appointment of managing or whole-time directors and managers from a date earlier than the date of notification and payment of remuneration to them up to 13th July, 1993, will continue to be governed by the provisions of Schedule XIII as in force up to 13th July, 1993. It is also clarified that where a company intends to increase the remuneration of its managing/whole-time director or manager already in position on the date of notification, it may do so, from a date not earlier than the date of the said notification, subject to the provisions of the revised Schedule read with the provisions of sections 198, 269, 309, 310, 311, 387 and 388 of the Companies Act, 1956, without the approval of the Central Government, even where the earlier appointment/remuneration had been approved by the Central Government, except in those cases where the appointment/remuneration had been approved by the Central Government subject to certain specific conditions. Where certain specific conditions had been imposed by the Central Government while approving appointment/remuneration, those conditions will still have to be complied with unless varied by the Central Government. It is also clarified that for the purpose of payment of salary and perquisites under revised Schedule XIII, the effective capital will have to be calculated as on the last date of the financial year preceding the financial year in which the appointment is made or in which the remuneration is fixed/revised. However, in those cases where companies have been incorporated in the same financial year in which the appointment has been made or the remuneration has been fixed or revised, it would be in order for such companies to make the appointment or fix/revise remuneration with reference to the effective capital as on the date preceding the date of appointment. You are requested to bring these clarifications to the notice of all your constituents.