Clarification on changes in section 269 by the Companies (Amendment) Act, 1988

As per Schedule XIII, the overall limit of perquisites and gratuity have been prescribed as under:-

"Perquisites:

Perquisites may be allowed in addition to salary and / or commission or both. In the case of persons posted at Bombay, Calcutta, Delhi and Madras, perquisites shall be restricted to an amount equal to the annual salary or Rs.1,35,000 per annum, whichever is less. In the case of persons posted at other places, perquisites shall be restricted to an amount equal to the annual salary or Rs.1,15,000 per annum, whichever is less.

Category 'B'

Contribution to provident fund, superannuation fund or annuity fund will not be included in the computation of the ceiling on perquisites to the extent these either singly or put together are not taxable under the Income-tax Act. Gratuity payable should not exceed half a month's salary for each completed year of service, subject to a ceiling of Rupees 1,00,000"

It is clarified that the gratuity payable is over and above the value of perquisites payable in terms of Schedule XIII to the Act.

* CIRCULAR NO. 5 DATED 15.9.1989.

Clarification on amendments in Sch. XIII by the Companies (Amendment) Act, 1988

Approval of the Central Government is not required in the case of appointment of managerial personnel made on or after June 15, 1988 (the date when the amended provisions were enforced), in accordance with the conditions specified in Schedule XIII to the Act. A return in the prescribed from (Form No.25C) is to be filed with the concerned Registrar within 90 days from the date of such appointment. While filing the return in form No.25C, a copy of the resolution passed by the board of directors and / or shareholders in the general meeting is required to be enclosed with the return. In terms of paragraph 1 of Part III of Schedule XIII to the Act, the appointment and remuneration of managerial personnel shall be subject to approval by a resolution of the shareholders in the general meeting. The said resolution in the general meeting can be passed even after the expiry of ninety days' period from the date of appointment by the board of directors, and is not required to be filed with the Registrar, so long as the resolution passed by the board of directors has already been enclosed with the said return.

No approval of the Central Government under section 268 is required for appointment or reappointment of managerial personnel, if made in terms of section 269 of the Act.

* CIRCULAR NO. 3 DATED 13.4.1989.