Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014
Published vide Notification No. G.S.R 249(E), dated 31.3.2014
Last Updated 16th January, 2020 [act3254]
(a) "Act" means the Companies Act, 2013 (18 of 2013);
(b) "Annexure" means the Annexure to these rules;
(c) "Fees" means the fees as specified in the Companies (Registration offices and fees) Rules, 2014;
(d) "Form" or “e form” means a form set forth in Annexure to these rules which shall be used for the matter to which it relates;
(e) "Regional Director" means the person appointed by the Central Government in the Ministry of Corporate Affairs as a Regional Director;
(f) "section" means section of the Act.(2) Words and expressions used in these rules but not defined and defined in the Act or in Companies (Specification of definitions details) Rules, 2014 shall have the meanings respectively assigned to them in the Act and said rules. 3. Filing of return of appointment. - A company shall file a return of appointment of a Managing Director, Whole Time Director or Manager, [***] within sixty days of the appointment, with the Registrar in Form No. MR.1 along with such fee as may be specified for this purpose. 4. Sitting fees. - A company may pay a sitting fee to a director for attending meetings of the Board or committees thereof, such sum as may be decided by the Board of directors thereof which shall not exceed one lakh rupees per meeting of the Board or committee thereof: Provided that for Independent Directors and Women Directors, the sitting fee shall not be less than the sitting fee payable to other directors. 5. Disclosure in Board's report. - (1) Every listed company shall disclose in the Board's report-
(i) the ratio of the remuneration of each director to the median remuneration of the employees of the company for the financial year;
(ii) the percentage increase in remuneration of each director, Chief Financial Officer,Chief Executive Officer, Company Secretary or Manager, if any, in the financial year;
(iii) the percentage increase in the median remuneration of employees in the financial year;
(iv) the number of permanent employees on the rolls of company;
(viii) average percentile increase already made in the salaries of employees other than the managerial personnel in the last financial year and its comparison with the percentile increase in the managerial remuneration and justification thereof and point out if there are any exceptional circumstances for increase in the managerial remuneration;
(xii) affirmation that the remuneration is as per the remuneration policy of the company.Explanation. - For the purposes of this rule. - (i) the expression “median” means the numerical value separating the higher half of a population from the lower half and the median of a finite list of numbers may be found by arranging all the observations from lowest value to highest value and picking the middle one;
(ii) if there is an even number of observations, the median shall be the average of the two middle values.(2) The board's report shall include a statement showing [the names of the top ten employees in terms of remuneration drawn and the name of every employee, who-]
(i) if employed throughout the financial year, was in receipt of remuneration for that year which, in the aggregate, was not less than [one crore and two lakh rupees];
(ii) if employed for a part of the financial year, was in receipt of remuneration for any part of that year, at a rate which, in the aggregate, was not less than [eight lakh and fifty thousand rupees per month];
(iii) if employed throughout the financial year or part thereof, was in receipt of remuneration in that year which, in the aggregate, or as the case may be, at a rate which, in the aggregate, is in excess of that drawn by the managing director or whole-time director or manager and holds by himself or along with his spouse and dependent children, not less than two percent of the equity shares of the company.(3) The statement referred to in sub-rule (2) shall also indicate -
(i) designation of the employee;
(ii) remuneration received;
(iii) nature of employment, whether contractual or otherwise;
(iv) qualifications and experience of the employee;
(v) date of commencement of employment;
(vi) the age of such employee;
(vii) the last employment held by such employee before joining the company;
(viii) the percentage of equity shares held by the employee in the company within the meaning of clause (iii) of sub-rule (2) above; and
(ix) whether any such employee is a relative of any director or manager of the company and if so, name of such director or manager:Provided that the particulars of employees posted and working in a country outside India, not being directors or their relatives, drawing more than sixty lakh rupees per financial year or five lakh rupees per month, as the case may be, as may be decided by the Board, shall not be circulated to the members in the Board's report, but such particulars shall be filed with the Registrar of Companies while filing the financial statement and Board Reports: Provided further that such particulars shall be made available to any shareholder on a specific request made by him in writing before the date of such Annual General Meeting wherein financial statements for the relevant financial year are proposed to be adopted by shareholders and such particulars shall be made available by the company within three days from the date of receipt of such request from shareholders: Provided also that in case of request received even after the date of completion of Annual General Meeting, such particulars shall be made available to the shareholders within seven days from the date of receipt of such request. 6. [Parameters for consideration of remuneration.] - The [***] or the 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.7. Fees. - (1) Every application made to the Central Government under the provisions of Chapter XIII shall be made in Form No. MR.2 and shall be accompanied by fee as may be specified for the purpose. [(2) ***] (3) Every such application seeking approval shall be made to the Central Government within a period of ninety days from the date of such appointment. 8. Appointment of Key Managerial Personnel. - Every listed company and every other public company having a paid-up share capital of ten crore rupees or more shall have whole-time key managerial personnel. [8A. Every private company which has a paid up share capital of ten crore rupees or more shall have a whole-time company secretary.] 9. Secretarial Audit Report. - (1)For the purposes of sub-section (1) of section 204, the other class of companies shall be as under-
(a) every public company having a paid-up share capital of fifty crore rupees or more; or
(b) every public company having a turnover of two hundred fifty crore rupees or more [or].
[(c) every company having outstanding loans or borrowings from banks or public financial institutions of one hundred crore rupees or more.][Explanation. - For the purposes of this sub-rule, it is hereby clarified that the paid up share capital, turnover, or outstanding loans or borrowings as the case may be, existing on the last date of latest audited financial statement shall be taken into account.] (2) The format of the Secretarial Audit Report shall be in Form No. MR.3. 10. Duties of Company Secretary. - The duties of Company Secretary shall also discharge, the following duties, namely:-
(1) to provide to the directors of the company, collectively and individually, such guidance as they may require, with regard to their duties, responsibilities and powers;
(2) to facilitate the convening of meetings and attend Board, committee and general meetings and maintain the minutes of these meetings;
(3) to obtain approvals from the Board, general meeting, the government and such other authorities as required under the provisions of the Act;
(4) to represent before various regulators, and other authorities under the Act in connection with discharge of various duties under the Act;
(5) to assist the Board in the conduct of the affairs of the company;
(6) to assist and advise the Board in ensuring good corporate governance and in complying with the corporate governance requirements and best practices; and
(7) to discharge such other duties as have been specified under the Act or rules; and
(8) such other duties as may be assigned by the Board from time to time.
DeclarationI am authorized by the Board of Directors of the Company vide resolution number* dated* to sign this form and declare that all the requirements of Companies Act, 2013 and the rules made the reunder in respect of the subject matter of this form and matters incidental thereto have been complied with. I also declare that all the information given herein above is true, correct and complete including the attachments to this form and nothing material has been suppressed.