The Ministry of Corporate Affairs (“MCA”) has issued the Companies (Appointment and Remuneration of Managerial Personnel) Amendment Rules, 2016 (“Rules”) to further amend the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014.
A summary of the amendments brought in by the Rules are provided below:
► Rule 3: Filing of return of appointment: Return of Appointment of Key Managerial Personnel (“KMP”) in Form MR-1 is not required to be filed for the appointment of Chief Executive Officer, Company Secretary and Chief Financial Officer
► Rule 5: Disclosure in Board’s report: Following key amendments are brought in:
1. In sub-rule 1, clauses (v), (vi), (vii) and (ix) to (xi) are omitted: Listed Companies are not required to disclose the relationship between average increase in remuneration and company performance, comparison of remuneration of KMP against the performance of the Company, variation in the market capitalisation of the company, price earnings ratio, key parameters for any variable component of remuneration availed by the Directors and the ratio of the remuneration of the highest paid director to that of the employees who are not directors but receive remuneration in excess of the highest paid director during the year, etc.
2. In sub-rule 2: For the words “the name of every employee of the company” the words “the names of the top ten employees in terms of remuneration drawn and the name of every employee, who-” are substituted.
3. In sub-clause (i) of sub-rule 2: The limit of the remuneration for disclosure of the names of employees of a company in the Board’s report, if employed throughout the financial year, is increased from “Rupees Sixty Lakh” to “Rupees One Crore and Two Lakh”.
4. In sub-clause (ii) of sub-rule 2: The limit of the remuneration for disclosure of the names of employees of a company in the Board’s report, if employed for a part of the financial year, is increased from “Rupees Five Lakh” per month to “Rupees Eight Lakh and Fifty Thousand” per month.
► Format of the Form MR-1 (Return of appointment of managerial personnel) has been revised, to include more details with respect to the appointment of Manager/ Managing Director/ Whole Time Director
The amendment rule shall come into force from the date of publication in the Official Gazette.
To read the amendment rule, please visit the below link:
http://www.mca.gov.in/Ministry/pdf/AmendmentRules_01072016.pdf