Section 200 of Companies Act, 2013 – Central Government or company to fix limit with regard to remuneration

Section 200. CENTRAL GOVERNMENT OR COMPANY TO FIX LIMIT WITH REGARD TO REMUNERATION

[Effective from 1st April, 2014]

Notwithstanding anything contained in this Chapter, [1] [***] a company may, while according its approval under section 196, to any appointment or to any remuneration under section 197 in respect of cases where the company has inadequate or no profits, fix the remuneration within the limits specified in this Act, at such amount or percentage of profits of the company, as it may deem fit and while fixing the remuneration, [1] [***] the company shall have regard to—

(a) the financial position of the company;

(b) the remuneration or commission drawn by the individual concerned in any other capacity;

(c) the remuneration or commission drawn by him from any other company;

(d) professional qualifications and experience of the individual concerned;

(e) such other matters as may be prescribed. 

Applicable Rules

Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014

[Effective from 1st April, 2014]

Rule 6. [2] [Parameters for consideration of remuneration]—The [3] [***] company shall have regard to the following matters, namely:—

(1) the Financial and operating performance of the company during the three preceding financial years.

(2) the relationship between remuneration and performance.

(3) the principle of proportionality of remuneration within the company, ideally by a rating methodology which compares the remuneration of directors to that of other directors on the board who receives remuneration and employees or executives of the company.

(4) whether remuneration policy for directors differs from remuneration policy for other employees and if so, an explanation for the difference.

(5) the securities held by the director, including options and details of the shares pledged as at the end of the preceding financial year.

 

[1] Omitted words “Central Government” by  Companies (Amendment) Act, 2017 notified vide notification no. File no. 1/5/2013 Part -I-CL-V dated 12th September, 2018.

[2] Substituted for the words “Applications to the Central Government” by the Companies (Appointment and Remuneration of Managerial Personnel) Amendment Rules, 2018 vide Notification No. F. No. 1/5/2013 CL-V dated 12th September, 2018.

[3] Omitted words “Central Government” by the Companies (Appointment and Remuneration of Managerial Personnel) Amendment Rules, 2018 vide Notification No. F. No. 1/5/2013 CL-V dated 12th September, 2018.