Remuneration to manager
chandru
(Querist) 25 November 2011
This query is : Resolved
Dear Professionals,
In a unlisted public co.(having Paid up cap More than 5 crore) an
employee who is going to be appointed as Manager and his proposed
remuneration would be 1crore p a. Does the co require Central govt
approval or not?
Please help in this regard as soon as possible.
Thanks in advance
Regards
Chandrashekhar
Guest
(Expert) 25 November 2011
A good question! If a single manager can draw 1/5th (one crore out of five crores) of the paid up capital of a company within a single year in the shape of his salary, how many directors, executives and other employees would be there to run the company, and how much the company is anticipating to earn profit within one year? Does the company do some extremely illegal business, like drugs and smuggling?
Shonee Kapoor
(Expert) 25 November 2011
:-)
Vague question.
Regards,
Shonee Kapoor
harassed.by.498a@gmail.com
Rajeev Kumar
(Expert) 25 November 2011
Agree with Dhingra JI
Advocate. Arunagiri
(Expert) 25 November 2011
No need for central govt approval.
But the accounts has to be approved by the shareholders.
Sailesh Kumar Shah
(Expert) 25 November 2011
If appointment of Manager subject to the provisions of section 269, read with Schedule XIII then no need to permissions of The Central Government.
In other case, The manager of a company may, subject to the provisions of section 198, receive remuneration either by way of a monthly payment, or by way of a specified percentage of the "net profits" of the company calculated in the manner laid down in sections 349 and 350 or partly by the one way and partly by the other:
Provided that except with the approval of the Central Government such remuneration shall not exceed in the aggregate five per cent of the net profits.
Sailesh Kumar Shah
(Expert) 26 November 2011
Respected Dhingra Sir and Mr. Shonee/Mr.Rajeev,
Author indicates 'Manager' means which defines section 2(24).
As per Section 269 of the companies act mandatory requires to appoint MD/Whole time director/Manager, by public company or a private company which is a subsidiary of a public company, having a paid-up share capital rupees five crores or more.
Also section 198,350,351,378 attracts.
Thanks
with Regards,
Guest
(Expert) 26 November 2011
Dear Shailesh,
Probably, you have seen the amended question of (having Paid up cap More than 5 crore) where the original question was for 5 crores. Also there is no fixed limit when some one uses of the word "more than." The limit can go up to 500, 5,000 or 50,000 crores or even up to infility.
Also, I don't think it is appropriate on our part to presume anything on behalf of the author of the question, particularly where the question of legal definitions can arise, as the author did not make a mention of section 2(24) anywhere in his question. In practice, companies don't have a single manager, they can have several managers, including MD, Director, President, VP, Chief Managers, General Managers, Deputy General Managers, Managers, Deputy Managers, etc., depending on the size of the company.
THE MOST CRUCIAL POINT OF HIS QUESTION IS that he is talking of AN EMPLOYEE who is going to be appointed as Manager, NOT MD etc., in terms of the definition of section 2(24).
So, I don't think the query was merely of academic nature just to satisfy a query of a student for his academic use, as the querist posted his query under "Others" category, but not in the "student" section.
Further to it, the author has also not made any mention of "subsidiary company" anywhere in his question.
To make it clear, I replied the query as that stood at the time of my reply.
Advocate. Arunagiri
(Expert) 26 November 2011
Mr.Shah,
It is true that the definition of the manager is in section 2(24). It can not be equated with the Managing Director.
Section 269 deals with the appointment of Managing/Whole time directors only, not the managers.
Sailesh Kumar Shah
(Expert) 26 November 2011
Shri Arunagiri,
Respected Sir,
Section 269 covers manager also.
Thanks
With Regards,
Sailesh Kumar Shah
(Expert) 26 November 2011
Extract of Section 269:-
269. Appointment of managing or whole-time director or manager to require Government approval only in certain cases.
1[269. Appointment of managing or whole-time director or manager to require Government approval only in certain cases.—(1) On and from the commencement of the Companies (Amendment) Act, 1988, every public company, or a private company which is a subsidiary of a public company, having a paid up share capital of such sum as may be prescribed, shall have a managing or whole-time director or a manager.
(2) On and from the commencement of the Companies (Amendment) Act, 1988, no appointment of a person as a managing or whole-time director or a manager in a public company or a private company which is a subsidiary of a public company shall be made except with the approval of the Central Government unless such appointment is made in accordance with the conditions specified in Parts I and II of Schedule XIII (the said Parts being subject to the provisions of Part III of that Schedule) and a return in the prescribed form is filed within ninety days from the date of such appointment.
(3) Every application seeking approval to the appointment of a managing or whole-time director or a manager shall be made to the Central Government within a period of ninety days from the date of such appointment.
(4) The Central Government shall not accord its approval to an application made under sub-section (3), if it is satisfied that—
(a) the managing or whole-time director or the manager appointed is, in its opinion, not a fit and proper person to be appointed as such or such appointment is not in the public interest; or
(b) the terms and conditions of the appointment of managing or whole-time director or the manager are not fair and reasonable.
(5) It shall be competent for the Central Government while according approval to an appointment under sub-section (3) to accord approval for a period lesser than the period for which the appointment is proposed to be made.
(6) If the appointment of a person as a managing or whole-time director or a manager is not approved by the Central Government under sub-section (4), the person as appointed shall vacate his office as such managing or whole-time director or manager on the date on which the decision of the Central Government is communicated to the company, and if he omits or fails to do so, he shall be punishable with fine which may extend to 2[five thousand rupees] for every day during which he omits or fails to vacate such office.
(7) Where the Central Government suo motu or on any information received by it is, prima facie, of the opinion that any appointment made under sub-section (2) without the approval of the Central Government has been made in contravention of the requirements of Schedule XIII, it shall be competent for the Central Government to refer the matter to the 3[Tribunal] for decision.
(8) The 3[Tribunal] shall, on receipt of a reference under sub-section (7), issue a notice to the company, the managing or whole-time director or the manager, as the case may be, and the director or other officer responsible for complying with the requirements of Schedule XIII, to show cause as to why such appointment shall not be terminated and the penalties provided under sub-section (10) shall not be imposed.
(9) The 4[Tribunal] shall, if, after giving a reasonable opportunity to the company, the managing or whole-time director or the manager, or the officer who is in default, as the case may be, comes to the conclusion that the appointment has been made in contravention of the requirements of Schedule XIII, made an order declaring that a contravention of the requirements of Schedule XIII has taken place.
(10) On the making of an order by the 4[Tribunal] under sub-section (9),—
(a) the company shall be liable to a fine which may extend to 5[fifty thousand rupees];
(b) every officer of the company who is in default shall be liable to a fine of 6[one lakh rupees]; and
(c) the appointment of the managing or whole-time director or manager, as the case may be, shall be deemed to have come to an end and the person so appointed shall, in addition to being liable to pay a fine of 6[one lakh rupees], refund to the company the entire amount of salaries, commissions and perquisites received or enjoyed by him between the date of his appointment and the passing of such order.
(11) If a company contravenes the provisions of sub-section (10) or any direction given by the 4[Tribunal] under that sub-section every officer of the company who is in default and the managing or whole-time director or the manager, as the case may be, shall be punishable with imprisonment for a term which may extend to three years and shall also be liable to a fine which may extend to 7[five hundred rupees] for every day of default.
(12) All acts done by a managing or whole-time director or a manager, as the case may be, purporting to act in such capacity and whose appointment has been found to be in contravention of Schedule XIII, shall, if the acts so done are valid otherwise, be valid notwithstanding any order made by the 4[Tribunal] under sub-section (9).
Explanation.—In this section “appointment” includes re-appointment and “whole-time director” includes a director in the ‘whole-time employment of the company’.]
----------------------------
1. Subs. by Act 31 of 1988, sec. 46, for section 269 (w.e.f. 15-6-1988). Earlier section 269 was substituted by Act 65 of 1960, sec. 91 (w.e.f. 28-12-1960).
2. Subs. by Act 53 of 2000, sec. 130, for “five hundred rupees” (w.e.f. 13-12-2000). 3. Subs. by Act 11 of 2003, sec. 33, for “Company Law Board”.
4. Subs. by Act 11 of 2003, sec. 33, for “Company Law Board”.
5. Subs. by Act 53 of 2000, sec. 130, for “five thousand rupees” (w.e.f. 13-12-2000).
6. Subs. by Act 53 of 2000, sec. 130, for “ten thousand rupees” (w.e.f. 13-12-2000).
7. Subs. by Act 53 of 2000, sec. 130, for “fifty rupees” (w.e.f. 13-12-2000).
Sailesh Kumar Shah
(Expert) 26 November 2011
Shri PS Dhingra,
Respected Sir,
you are also correctly opinion since whole facts were not disclosed by author.
Thanks
with Regards,
Guest
(Expert) 26 November 2011
I hope, with the extended discussion, the issue gets side tracked towards appointment of MD/Manager, instead on concentrating on the main point of remuneration (salary, etc.) to the manager, who is in the process of being appointed.
Advocate. Arunagiri
(Expert) 26 November 2011
Mr.Shah,
I accept my mistake.
By mistake I have referred to the old book 1984, which includes only MD/whole time director.
Thanks for pointing out this.
Devajyoti Barman
(Expert) 26 November 2011
That is called a true sportsman spirit.
Guest
(Expert) 26 November 2011
Not only lawman's, but TRUE lawman's as well as sportsman's spirit, Mr. Arunagiri.
Raj Kumar Makkad
(Expert) 27 November 2011
So my endorsement to the views/advice of Shah has ultimately been declared as correct.
M/s. Y-not legal services
(Expert) 27 November 2011
