Ailing SEZ units with public funds to attract pay curbs

NEW DELHI: The Department of Company Affairs (DCA) has ruled that the relaxation in the ceiling on managerial remuneration will be made available to loss-making companies registered in special economic zones only if they have not raised any money by public issue of shares or debentures in India. The DCA has already notified the amendment to Schedule XIII of the Companies Act to hike the limit to Rs 2,40,00,000 per annum or Rs 20,00,000 per month for the SEZ companies. The notification, as pasted on the DCA's website, has also defined an additional eligibility qualification for seeking the liberalised cap.According to the notification, the SEZ companies can avail of the liberalised cap provided further that such companies have not made any default in India in repayment of any of its debts (including public deposits) or debentures or interest payable thereon for a continuous period of 30 days in any financial year.All other companies can pay their managerial employees a maximum of Rs 48 lakh a year in case they post losses. The DCA has, however, made an exception for the software sector companies that can pay their top executives up to Rs 75 lakh per annum. ET had reported, on May 30, that the DCA had decided to amend the Companies Act to relax the ceiling on annual managerial remuneration payable by SEZ companies to Rs 2.4 crore from the existing level of Rs 48 lakh.The commerce ministry had earlier asked the DCA to relax the caps on managerial remuneration for companies registered in SEZs. The commerce ministry is the administrative ministry for SEZs and is empowered to notify SEZs from time to time. The board of approvals on SEZs had submitted a formal proposal to the DCA, asking for a waiver of mandatory approval of the department on appointments of whole-time directors and managing directors and their pay packages.The DCA has also accepted other proposals from the commerce ministry such as a relaxation of the 12-month residence condition for appointments of MDs in SEZ-based companies.Such companies could not recruit best talent available on global job markets so far as existing company law provisions required a candidate to spend a minimum of 12 months in India prior to the appointment. The condition was imposed in addition to the mandatory security clearance from the home ministry.The board of approvals had also sought permission for such companies to hold board meetings through video-conferencing. DCA has already announced that it has decided to allow conduct of board meetings by video-conferencing and other electronic means for all companies. A cabinet note on the proposal is expected to be moved by the DCA, shortly.

Ailing SEZ units with public funds to attract pay curbs

The Department of Company Affairs (DCA) has ruled that the relaxation in the ceiling on managerial remuneration will be made available to loss-making companies registered in special economic zones only if they have not raised any money by public i...

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