LATEST AMENDMENTS COMPANIES ACT 2013
Ministry of Corporate Office ("MCA") vide its three separate notifications dated 18th March, 2021 has issued commencement of the provisions of the Companies (Amendment) Act, 2020, amendment in Section 197 and Schedule V of the Companies, 2013, and has notified the establishment of the Central Scrutiny Centre (CSC). Following is the brief on each notification:
1. Notification No. S.O. 1255(E): Commencement Notification
- As per the above notification, Government of India has appointed 18th March, 2021, as the date on which the provisions of Section 32 and Section 40 of the Companies (Amendment) Act, 2020, shall come into force.
Pursuant to this notification, independent directors and non-executive directors are eligible to receive remuneration in accordance with the provisions of Schedule V in case there are no profits or profits are inadequate, which was earlier limited only to other directors like managing director, whole-time director or manager.
2. Notification No. S.O. 1256(E): Amendment in Schedule V of the Act
Amendment in Schedule V has been made to allow companies to pay remuneration to their non-executive directors (including Independent Directors) where there are no profits or profits are inadequate.
The words “or other director” is added after the words “managerial person” in section I, II and III of PART II of Schedule V which is explained through by inserting an explanation “the term or other director shall mean a non-executive director or an independent director”.
And following table has been added, substituting the previous table, prescribing the remuneration payable in case of losses or inadequacy of profits:
|
(1) |
(2) |
(3) |
|
|
Sl. No. |
Where the effective capital (in rupees) is |
Limit of yearly remuneration payable shall not exceed (in Rupees) in case of a managerial person |
Limit of yearly remuneration payable shall not exceed (in Rupees) in case of other director |
|
(i) |
(i) Negative or less than 5 crores. |
60 Lakhs
|
12 Lakhs |
|
(ii) |
(ii) 5 crores and above but less than 100 crores. |
84 Lakhs |
17 Lakhs |
|
(iii) |
(iii) 100 crores and above but less than 250 crores. |
120 Lakhs
|
24 Lakhs |
|
(iv) |
(iv) 250 crores and above. |
120 lakhs plus 0.01% of the effective capital in excess of Rs. 250 crores: |
24 lakhs plus 0.01% of the effective capital in excess of Rs. 250 crores: |
3. Notification No. S.O. 1257(E): Establishment of Central Scrutiny Centre (CSC)
- MCA has established Central Scrutiny Centre (CSC) to carry out scrutiny of e-forms filed by the Companies on MCA Portal under Straight through Processes (STP) mechanism.
- The CSC shall function under the administrative control of the e-governance Cell of the MCA.
- The CSC shall carry out scrutiny of the forms and forward findings thereon, wherever required, to the concerned jurisdictional RoC for further necessary action.
- The CSC shall be located at the Indian Institute of Corporate Affairs (IICA).
- This notification shall come into force from the 23rd March, 2021.
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