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TMI BlogConditions for appointment of managing/whole-time Director, etc. - Amendment of Schedule XIII with effect from 1-2-1994 - Certain Clarifications regardingX X X X Extracts X X X X X X X X Extracts X X X X ..... of notification. Copies of revised Schedule XIII and Press Note, dated 1-2-1994, are enclosed. 2. When Schedule XIII to the Companies Act, 1956, was last amended on 14-7-1993, it was hoped that the revision in the Schedule would lead to substantial reduction in the number of applications made to the Central Government under sections 269, 198, 309, 387, 388 and 310. However, it has been observed that there had been only marginal reduction in the number of such applications made by companies to the Central Government. It was also found that, in a large number of cases, applications were still being made by companies to the Central Government even where appointment had been made or remuneration has been fixed in conformity with the provis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ection II of Part II shall not be taken into account for computing the ceiling on remuneration. (iii) The remuneration specified in section 2 of Part II of Schedule XIII is minimum remuneration for the purpose of section 198 of the Companies Act which would be admissible in the event of absence or inadequacy of net profits in any financial years, without the approval of the Central Government in individual cases. In other words, no separate approval of the Central Government would be required under sections 198(4) and 309(3) of the Companies Act provided the remuneration paid to a managerial person in the event of absence or inadequacy of net profits in any financial year is in accordance with the provisions of section 2 of Part II ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion will have to be scaled down appropriately unless approval of the Central Government is obtained to payment of remuneration in excess of the limits specified in section 2 of Part II of Schedule XIII. (vi) Where a company intends to increase or otherwise vary remuneration of its managerial person already in position on the date of the notification, it may do so from a date not earlier than the date of the notification, subject to the provisions of the revised schedule read with the provisions of sections 198, 309, 310, 311, 387 and 388 of the Companies Act, 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 Centr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (viii) It has been observed that resolutions have been adopted in shareholders meeting of some companies authorising respective board of directors to revise remuneration of managerial personnel in accordance with such amendments as have been made or may be made in Schedule XIII, and such resolutions of shareholders are being treated as compliance with the provisions of Part III of Schedule XIII. It is emphasized that the provisions of sub-section (1) of section 309 and Part III. Schedule XIII do not contemplate any blanket approval of the shareholders and the same must be specific as to the terms and conditions of appointment and remuneration. Incidentally Part III of the Schedule does not envisage prior approval or approval within 90 day ..... X X X X Extracts X X X X X X X X Extracts X X X X
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