LIMITS ENHANCED FOR DISCLOSURE OF PARTICULARS OF EMPLOYEES UNDER 217(2A) OF COMPANIES ACT 1956
The Ministry of Corporate Affairs has vide notification dated 31st March 2011 enhanced the limits for the purpose of disclosure of particulars of employees in Directors report as requisite under Section 217 (2A) read with Companies (Particulars of Employees) Rules, 1975 from the existing limit of Rs. 24 lakh/ year/ Rs. 2 lakh per month to Rs. 60 lakh per year/ Rs. 5 lakh per month and by such notification also covers Government Companies for such disclosures. By such notification, the amended rules may be called as Companies (Particulars of Employees) Amendment Rules, 2011.
The effect of the notification shall require the Companies including Government Companies to include a statement showing the name of every specified employee of the Company in their Board Report pursuant to Section 217 (2A) of the Companies Act 1956 read with Companies (Particulars of Employees) Amendment Rules, 2011 which provides:
(i) If employed throughout the financial year, was in receipt of remuneration for that year which, in aggregate, was not less than Rs. Sixty Lakh for the year: or
(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 Rs. Five Lakh per month.
LIMITS ENHANCED FOR OBTAINING APPROVAL OF THE CENTRAL GOVERNMENT DISCLOSURE OF PARTICULARS OF EMPLOYEES UNDER 217(2A) OF COMPANIES ACT 1956
The Ministry of Corporate Affairs has notified dated 6th April 2011 enhancement in previous limit of Rs. Fifty thousand per month given under Rule 3 of Directorâ€™s Relative (Office or Place of Profit) Rules, 2003 to Rs. Two lakh fifty thousand per month for payment remuneration to relatives or partners of the directors of the Company falling under Section 314(1B) of the Companies Act 1956. By such notification, the amended rules may be called as Directorâ€™s Relative (Office or Place of Profit) Amendment Rules, 2011.
The effect of notification shall require Companies to obtain prior consent of the Company by a Special Resolution and approval of the Central Government under Section 314(1B) of the Companies Act 1956 read with Directorâ€™s Relative (Office or Place of Profit) Amendment Rules, 2011, with respect to appointment of:
- Partner or relative of a director or manager; or
- Firm in which such director or manager, or relative of either is a partner; or
- Private company of which such director or manager or relative of either is a director or member,
to any office or place of profit which carries a monthly remuneration exceeding Rs. Two lakh fifty thousand per month.
The notification also redefined the constitution of Selection Committee under Rule 7 of Directorâ€™s Relative (Office or Place of Profit) Amendment Rules, 2011 for purpose of appointment of persons mentioned under Section 314 (1B) of the Act for Listed Companies and Unlisted Public Companies and states that every company
Selection Committee means:
- For Listed Public Companies- a committee, the majority of which consist of independent directors and an expert in the respective field from outside the Company.
- For Unlisted Public Companies- independent directors are not necessary but outside experts must be there.
- For Private Limited Companies- independent directors and outside experts are not necessary to be there.
Thus from now, even Private Limited Companies are required to form Selection Committee for appointment of persons falling under Section 314 of the Companies Act 1956.
PAN MANDATORY FOR ALLOTMENT OF DIRECTOR IDENTIFICATION NUMBER
The Ministry of Corporate Affairs has vide its general circular no. 11/2011 dated 7th April 2011 has made the PAN mandatory for issue of Director Identification Numbers and also mandated all DIN holders who have not furnished their PAN at the time of obtaining DIN, are required to furnish their PAN by filing DIN 4 eform by 31st May 2011.
The following fields have been made mandatory in DIN 1 eform:
- Name of applicant.
- Fatherâ€™s name of applicant.
- Date of Birth.
- Income Tax PAN, in case of Indian Nationals.
- Passport in case of all foreign nationals.
CLARIFICATION REGARDING EASY EXIT SCHEMES
The Ministry of Corporate Affairs has notified the revised simplified procedure for dealing with the applications received under easy exit scheme issued for striking off the name of the Company under Section 560 of the Companies Act 1956 vide its general circular no 12/2011 dated 7th April 2011 against proposals received for simplification. Circular enclosed for simplified procedure.