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March 2011

Managerial remuneration in unlisted companies having no profits/inadequate profits

By Sejal Vasa | Company Secretary
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75 Managerial remuneration in unlisted companies
having no profits/inadequate profits.

MCA vide Press Release No. 4/2011, dated 8-2-2011
has exempted public limited companies (listed and unlisted) with no
profits/inadequate profits, so long as the conditions specified in Schedule
XIII, including special resolution of shareholders and absence of default on
payment to creditors, from the requirement of approaching the Ministry for
approval in those cases where the remuneration of directors/equivalent
managerial personnel exceeds certain limits. The matter has been re-examined in
the light of the evolving economic and regulatory environment.

Accordingly, Schedule XIII of the Companies Act,
1956 is being amended to provide that unlisted companies (which are not
subsidiaries of listed companies) shall not require Government approval for
managerial remuneration in cases where they have no profits/inadequate profits,
provided they meet the other conditions stipulated in the Schedule.

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