Ashok

Whether Schedule V is applicable for commission withdrawn from foreign subsidiaries or foreign step down subsidiaries?

Ashok

Whether Schedule V is applicable for commission withdrawn from foreign subsidiaries or foreign step down subsidiaries?

Ashok

Whether Schedule V is applicable for commission withdrawn from foreign subsidiaries or foreign step down subsidiaries?

Ashok

Whether Schedule V is applicable for commission withdrawn from foreign subsidiaries or foreign step down subsidiaries?

Ashok

Provisions of Section 203 of the Companies Act, 2013 Section 203A of the CA 2013 state that the whole time KMP shall not hold office (KMP – Executive) in more than one company except in its subsidiary company at the same time. According to first proviso of Sec. 203, a whole time KMP can be appointed as director (non-executive) in any other company with the permission of the Board of directors of the company where he is appointed as whole time KMP. View of Company Law Committee - CLC According to Para 13.13 of the Company Law Committee Report released by the Ministry of Corporate Affairs on February 01, 2016 for public comments, the Committee has taken the following view: Section 203(3) provides that whole-time key managerial personnel shall not hold office in more than one company except in its subsidiary company at the same time. The Committee noted that Section 13 of the General Clauses Act, 1897 provides that ‘singular’ shall include the ‘plural’, unless there is anything repugnant in the subject or the context. Thus, whole-time key managerial personnel may hold office in more than one subsidiary company as per the present law. Accordingly, the Committee recommended no change in this regard. ICAI in its Exposure Draft on Application Guide on Managerial Remuneration under the Companies Act 2013 state as follows: Remuneration payable to a Managerial person in two companies •Where a person draws remuneration from two companies, the maximum limit of the total remuneration cannot exceed the higher of the maximum limit under any one of the companies. •Remuneration from foreign subsidiaries or foreign companies in addition to an Indian company is not covered under the Indian Companies Act. Hence, if paid by them, it will not be within the ceiling prescribed under the Companies Act, 2013. In view of the above provisions / guidelines, the following questions are emerge: a) Whether a whole time KMP can draw commission as non-executive director in any other subsidiary companies with the permission of the Board of directors of the company where he is appointed as whole time KM.? b) Whether stand taken by the CLC is legally tenable.? c) Whether Guidance provided by ICAI in its Exposure Draft is acceptable.?

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Remuneration to KMP

Posted By: Ashok 7 year(s) ago

Shivam Singhal

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