1. COMPANIES ACT, 2013 Appointment and Remuneration of Managerial Personnel CA. Arun Saxena Saxena & Saxena Chartered Accountants 811, Ansal Bhawan 16, Kasturba Gandhi Marg, New Delhi – 110 001. Mob.: 9810037364 E-mail : arunsaxena@saxenaandsaxena.com

2. Appointment of Managing Director, Whole – Time Director or Manager (Section 196)  APPLICABILITY: Provisions of Section 196 are applicable to all companies including Pvt. Co.s  A Company can appoint any of them MD Manager BUT not both  Term of MD/ WTD/Manager- not exceeding 5 years at a time. SAXENA & SAXENA 2

3.  Re-appointment can be made not later than one year before expiry of term.  Age should be between 21years to 70 years.  If exceeding 70 yrs, justification should be given in explanatory statement.  Appointment should be made in Board Meeting subject to appointment of Shareholders in General meeting. SAXENA & SAXENA 3

4.  Appointment should be in accordance with provision of Section 197 and Schedule V.  If, in variance to the conditions specified in the schedule, CG approval required.  Notice for BM or GM shall specify all terms and conditions of appointment and including interests of directors in such appointment.  Return – 60 days (90 days in old Act) SAXENA & SAXENA 4

5. MANAGERIAL REMUNERATION (SECTION 197,198)  APPLICABILITY: Provisions of Section 197 are applicable to public companies.  No restriction relating to managerial remuneration for a private company. SAXENA & SAXENA 5

6. Overall Managerial Remuneration  For all managerial Personnel(s) – 11% of net profits.  In case remuneration exceeds 11% of net profits, approval of CG required subject to provisions of Schedule V. SAXENA & SAXENA 6

7. Managerial Remuneration with approval in GM i. For one MD/WTD/Manager – 5% of net profit ii. Where more than one MD or WTD or Manager – remuneration cannot exceed 10% of net profit. iii. Remuneration to Directors who are neither WTD or MD: i. If there is MD or WTD or Manager - 1% of net profit ii. If there is no MD or WTD or Manager - 3% of net profit SAXENA & SAXENA 7

8. In case of No Profit or Inadequate Profit i. Compliance of Schedule V i. In case of non compliance of Schedule V, CG approval. SAXENA & SAXENA 8

9. Schedule V  In case company has no profits or inadequate profit, it may, without CG approval, par remuneration not exceeding higher of limits given below : SAXENA & SAXENA 9 Where the effective Capital isLimit of yearly remuneration shall not exceed (Rs.) (i) Negative or less than Rs. 5 Cr30 Lacs (ii) 5 Cr & above but less than 100 Cr42 Lacs (iii) 1000 Cr & above but less than 250 Cr 60 Lacs (iv) 250 Cr& above60 Lacs +0.01 % of the effective capital in excess of Rs. 250 Cr

10.  NOTES: 1. Above limits shall be doubled, if SR passed. 2. Above limits shall be pro rated if remuneration is paid for part of year. 3. If Managerial Personnel i. Is not security holder of Rs. 5 Lacs or more; or ii. Not related to directors or promoters within 2 years prior to his appointment Remuneration can be paid 2.5% of current relevant profits. SAXENA & SAXENA 10

11. CONDITIONS (i) payment of remuneration is approved by a Board resolution; (ii) Approval by the Nomination and Remuneration Committee; (If any) (iii) the company has not made any default in repayment of any of its debts for a continuous period of 30 days in the preceding financial year before the date of appointment of such managerial person; (iv) A SR has been passed at GM for payment of remuneration for a period not exceeding 3 years; SAXENA & SAXENA 11

12. v. A statement along with a notice calling the GM given to the shareholders containing the following information, namely:— I. General Information: Nature of industry, date of commencement of production, finacial performance etc. II. Information about the appointee: Background details, Past remuneration, recognition, awards, job profile, remuneration proposed etc. III.Other information: Reason for loss or inadequate profit, expected increase in productivity and profit in measurable terms, etc. SAXENA & SAXENA 12

13. Provisions of Section 197  The remuneration shall be exclusive of sitting fees. {Section 197(2)}  Net profit for this section shall be computed as per method given in Section 198. {Section 197(8)}  The remuneration payable shall be determined either by articles or by OR or by SR where its articles required for SR. SAXENA & SAXENA 13

14. THANK YOU 14 SAXENA & SAXENA