The department of company affairs (DCA) has decided to double the ceilings on managerial remuneration paid by companies under Schedule XIII of the Companies Act, 1956.
The maximum monthly salary has been raised to Rs 4 lakh from the present Rs 2 lakh. The maximum package for infotech (IT) employees, however, has been pegged at the existing level of Rs 75 lakh a year.
The department, which will notify the changes by amending Schedule XIII, has introduced three separate tiers for companies with different corporate governance standards. It has decided to attach certain riders to the relaxed remuneration norms, top government officials told Business Standard. This will prevent siphoning of company funds, they added.
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Tier I is the existing ceiling of monthly remuneration that can be paid to employees, with an additional effective capital slab of Rs 50-100 crore allowing a maximum package of Rs 1.75 lakh a month. This has to be supported by a special resolution of the committee on remuneration.
Under tier II, companies may pay higher salaries. They, however, should not have defaulted on loans and public deposits for a period of three years. Such companies will have to adhere to these conditions in order to pay their employees twice as much as under tier I.
At a later date, the department would formulate guidelines to enable its officials to check if the companies paying higher remuneration are abiding by the conditions, the officials said.
All public and private companies that are subsidiaries of public companies have to seek approval of the DCA for appointment of managerial personnel and also the scales to be paid to them under the provisions of Schedule XIII.
Depending on the effective capital of a company, the department specifies the maximum remuneration permitted for the company's managerial personnel, including whole-time directors and managing directors.
The remuneration payable in case of IT companies in each slab is higher in the ratio 75:24. The remuneration to be approved by the department includes salary, dearness allowances, perquisites and other allowances such as those for entertainment.