Managerial Appointment Norms To Be Recast

After the notification, companies will not require to take Central government's permission in matters of appointing directors and managers, provided it retains the sanction of 75 per cent of shareholders at an annual general meeting.

This provision proved to be a bane for the corporate sector as exemption had to be sought in person. This meant the person had to present himself before a DCA official to certify that he possessed the mental capabilities to handle the job entrusted to him. The department has now given the authority for deciding such matters to the shareholders.

DCA is freeing rules governing managerial remunerations.

 

Under the existing company law, a person can be appointed as managing director on the boards of a maximum of two companies. But salaries cannot be drawn from two companies without a government clearance. For any additional perks or renumeration drawn from any other appointments, government permission was necessary. Thus, when a managing director draws a salary from one position and conveyance benefits from another, he would require clearance.

The new change will give the managing director the flexibility to choose and combine remunerations from two or more appointments without having to approach the government for clearance, provided the overall ceiling of remuneration from one managerial appointment is met.

With the new rule coming into force, a managing director can draw salary from one company and the conveyance facilities from another, without seeking the government's permission, provided other conditions are met.