Salaries of chief executives should be capped and shareholders should have a say in managerial remunerations, a parliamentary panel on the new Companies Bill has suggested.

It has asked the Corporate Affairs Ministry to develop a "rational formula" for managerial remunerations.

"The committee are of the view that an overall outer ceiling on managerial remuneration may be prescribed," said the Parliamentary Standing Committee on Finance, which last week presented its report on Companies Bill 2009 in the Lok Sabha.

"The Ministry may evolve a rational formula for this purpose...The remuneration payable within this overall ceiling may be decided by the remuneration committee of board or shareholders as already proposed in the Bill," it added.

Currently, according to section 198 of the Companies Act 1956, total remuneration paid to managerial personnel cannot be more than 11 per cent of net profit, while an individual manager's compensation is capped at 5 per cent of net profit.
    
If a company wishes to break the ceiling, it requires a go ahead from the Corporate Affairs Ministry.
    
Besides, in case a company fails to garner profit or the profit is not adequate, it requires the Central Government's approval to dole out salaries.
    
The panel has further suggested that in the event of established fraud or fudging of profits by the company, remuneration paid to the key managerial personnel may be recovered.
    
The Committee's report has came after almost eight months of deliberation. Corporate Affairs Minister Salman Khurshid had tabled the new Companies Bill in Parliament in August last year.
    
Responding to the suggestions on this provision in the Companies Bill 2009, the Ministry has favoured an "umbrella limit (similar to limits depending on net profits of the company as is provided in existing section 198 of the Act) for remuneration".
    
The revised Companies Bill, which seeks to replace the half-a-century old Act, is expected to be tabled in Parliament in the winter session, or latest by the Budget session, according to Khurshid. He has exuded confidence that the new Act would be enacted by the end of this fiscal.

New Ipad Application :Business Standard's all new IPad App Click here to download for free Other Stories      - Markets end on a strong note - Nabard FY14 operating surplus soars 28% to Rs 1,635 cr - RBI eases banks' term deposit restrictions - NMDC Q4 net down 21.74% to Rs 1,642.28 cr - Balrampur Chini Q4 profit up by 15%

Tags : CEO | management | corporate affairs | Companies bill | Lok sabha | Companies Act |   Read Business news in  Advertisements -  Journey on, We are by Your Side. Click here to know more -  2 Lac Apartments, 1 Lac House / Plots. Click here -  Help a Child Achieve her. Click to know more -  Benefits Upto Rs. 2.36 Lakhs on the Fully Loaded TJet Petrol. -  The Best Seller is Also the No. 1 in Mileage. Click here -  Watch The Film Here. Click here to know more.. -  Leader in Passenger Car & Automobile Tyres. Click here -  1 billion in saving for Unilever without any tangles. -  A Brand New Server at a Price That Fits Your Budget. Click here -  Learn How One City is Running on FOOD SCRAPS. -  One Partnership Endless Possibilities. Click here to know more -  Helping doctors detect diseases earlier, saving costs & extending lives. -  36 Lakhs can get you a pool of Luxuries. Click here -  Which is the best plan for your daughter -  Check out the TRUE COLOURS of your Stocks, Now for FREE! -  One of the leading business schools in the world.Know More