India:
Remuneration To Independent Directors.
17 July 2014
S&A Law Offices
To print this article, all you need is to be registered or login on Mondaq.com.
As per Section 149 (6) of Companies Act 2013, A person cannot be
appointed as an Independent Director in the company, if such person
has or had pecuniary relationship with the company, its holding,
subsidiary or associate company, or their promoters, or directors,
during the two immediately preceding financial years or during the
current financial year, as such relationship will affect the
independence of the director.
As per the plain reading of the above mentioned Section,
remuneration to be paid to such Independent Director can constitute
a pecuniary relationship.
But MCA in its General Circular No. 14/2014 dated 09.06.2014,
has clarified that the payment of remuneration to the Independent
Directors, if it is as per Section 197 i.e. Overall maximum
managerial remuneration and managerial remuneration in case of
absence or inadequacy of profits, then such a transaction does not
constitutes pecuniary relationship with the company.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
POPULAR ARTICLES ON: Corporate/Commercial Law from India
Private Equity And M&A In India: What To Expect In 2024?
Nishith Desai Associates
2023 was a year of unexpected headwinds, such as the hiking of interest rates by governments across the world, the banking sector instability in the US and Europe, the Russia-Ukraine and Israel-Hamas conflict, to name a few.
Revisiting Representation And Warranty Clauses
Obhan & Associates
Clauses related to representations, warranties and indemnifications are widely negotiated clauses of commercial contracts especially in M&A transactions. The interests of the parties to a contract typically do not align with respect ...
A Guide To Share Purchase Agreements
Gravitas Legal
Share Purchase Agreement is an agreement entered into between the buyer and seller(s) of shares of a target company. Usually Share Purchase Agreements entail that the buyer would be taking over...
ESOPs And SARs: From Ownership To Appreciation
Alaya Legal
Louis Ortho Kelso, a political economist and lawyer, back in 1956, created the first employee stock ownership scheme based on his belief that the ownership of a company...