MR – 2


Form of application to the Central Government for approval of appointment or reappointment and remuneration or increase in remuneration or waiver for excess or over payment to managing director or whole time director or manager and commission or remuneration to directors 

  • EForm MR-2 is required to be filed pursuant to Section 196, 197, 200, 201(1) and 203(1) of the Companies Act, 2013 and rule 7 of Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 EForm MR-2 is required to be filed pursuant to Section 196, 197, 200, 201(1) and 203(1) of the Companies Act, 2013 and rule 7 of Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014
  • In order to seek approval from Central Government for appointment, reappointment, payment of remuneration including increase in remuneration, waiver of excess remuneration to the managerial personnel (managing director or whole time director or manager) and payment of commission or remuneration to directors or modification in terms and conditions of appointment, company needs to file eForm MR-2.
  • Form the purpose of form, select any one option for which application is made, user can select option 1 with 4 also, else only one option needs to be selected. If the user wants to apply for any other proposal also then file another eForm MR-2.
  • EForm MR-2 is required to be filed within 90 days of appointment or reappointment. If the application is not filed in time, furnish application under relevant section of the Act with requisite fee along with this eForm.
  • Enter the particulars of the proposed appointee or the person in whose respect the application is filed. Enter an approved DIN in case of Managing Director or Whole time Director. Enter an approved DIN or valid income tax PAN in case of manager.
  • It is mandatory to enter effective date of appointment or reappointment in case of option 1 selected of field 4 a.
  • Enter the details of resolution by the Board of directors in respect of the proposal. Enter the board resolution date, nomination and remuneration committee’s resolution date (if applicable), share holders’ resolution date.
  • Enter details of net profit or loss as computed under section 198 of the Act.
  • In case of profit under section 198, system shall automatically display 11% of such profits in the respective fields.
  • Enter the details of remuneration paid by the company during the immediately preceding three financial years to its director or managing director or whole time director or manager. Enter the number of person(s) to whom remuneration has been paid.
  • Based on the number entered here, blocks for entering the details shall be displayed. Details of maximum five person(s) can be filed through this eForm. If the total number is more than five, then details of remaining person(s) can be provided as an optional attachment.
  • Details of all executive directors (if any) shall be provided first and thereafter details of non-executive directors shall be provided.
  • Enter an approved DIN in case of director or DIN/ PAN in case of manager. On clicking the Pre-fill button, system will automatically display the name in DIN is entered. In case of Income-tax PAN, name is required to be entered. Enter the other relevant details like designation & whether director is executive or non-executive.
  • It shall be validated that the person (whose DIN or income-tax PAN is entered) is associated with the company.
  • Enter details of remuneration paid by the company during the immediately preceding three financial years by the company
  • In case of loss under section 198, zero should be entered in field for % of net profits u/s 198. In case Government approval is not obtained, enter the reasons for the same.Enter the details of remuneration being drawn from any other company by the appointee or person in whose respect application is filed.
  • In case company has no profits or its profits are inadequate, field is required to be filled by the user in case of payment of remuneration in excess of the prescribed limits given in Schedule V of the Act.
  • Enter the date of board resolution, date of remuneration committee’s and nomination committee’s resolution (if applicable) and date of shareholder’s resolution.
  • In case of special resolution passed, enter the SRN of eForm MGT.14 associated with CIN.
  • In case of payment of remuneration in excess of 11% of the Net Profit, field is mandatory in case of payment of remuneration exceeding 11 percent of Net Profit. Remuneration proposed should be greater than 11% of profit u/s 198 calculated.
  • Enter the amount in rupees for the effective capital of the company as per the latest audited balance sheet. The effective capital is defined as per Schedule V of the Companies Act, 2013.
  • [Effective capital means the aggregate of the paid-up share capital (excluding share application money or advances against shares); amount, if any, for the time being standing to the credit of share premium account; reserves and surplus (excluding revaluation reserve); long-term loans and deposits repayable after one year (excluding working capital loans, overdrafts, interest due on loans unless funded, bank guarantee, etc., and other short-term arrangements) as reduced by the aggregate of any investments (except in case of investment by an investment company whose principal business is acquisition of shares, stock, debentures or other securities), accumulated losses and preliminary expenses not written off.]
  • Also, attach the copy of the calculation sheet of effective capital as an attachment.
  • Enter the details of the proposed remuneration per annum of the appointee or of the person in whose respect application is filed. In case commission, bonus or performance linked incentive is in percentage, specify such percentage.
  • If the proposed remuneration given is for more than one year then provide for each year or part thereof for the total period of remuneration proposed.
  • In case of waiver of excess remuneration, enter the details of excess remuneration paid, total entitlement, excess remuneration to be waived off along with the circumstances under which such amount were paid in excess of the limits.

Declaration:

  • Enter serial number of board resolution and date of board meeting where person signing the eForm is duly authorized by the board.

Attachments:

  • Copy of the calculation sheet of effective capital ……….is mandatory in case Option 4 selected in field 4(a)
  • Certified true copy of the resolution of Board of directors is mandatory in all cases.
  • Copy of the resolution of nomination and remuneration committee……….. is mandatory in case date entered in 10(b) or 14(b).
  • Certified true copy of resolution of shareholder(s) along with notice ……… is mandatory in case date entered in 10(c )or 14(c ).
  • Certificate from the auditor or company secretary ……………………is mandatory in all cases.
  • Certificate of no-default in repayment of debts…………… if no selected in field 15.
  • No objection certificate from the financial institutions(s) or bank(s) …………… if no selected in field 15.
  • Copy of the order of BIFR or NCLT together with the copy of a scheme of revival or rehabilitation.
  • Copy of draft agreement between the company and the proposed….. is mandatory in case option 1 selected in 4(a).
  • Newspaper clipping in which notices ……… is mandatory in all cases.
  • Copy of employment visa/ passport, in case the proposed appointee is a foreign citizen.
  • Copies of educational or professional qualification certificate.
  • Statement as per item (IV) of third proviso ……………. is mandatory in case option 4 selected in 4(a).
  • Projections of the Turnover and net profits for next three years.
  • Calculation of estimated profit under section 198 of the Act is mandatory in all cases except option 1 of 4(a).
  • Auditors Certificate pursuant to Section 164 of the Companies…… is mandatory in case option 1 selected in 4(a).
  • An application under Section 460 of the Act for condonation of delay…… is mandatory in case no selected in field 4(b).
  • Full and proper justification in favor of the proposal……………is mandatory in all cases.
  • Documentary proof regarding compliance of the provisions ……….…… is mandatory in case option 1 selected in 4(a).
  • Certificate by the secretary of the company or CA/CS in whole time practice to be notified erstwhile.
  • Details, if applicant company is a subsidiary of listed company.
  • Certificate from CA/CS in whole time practice along…… is mandatory in case option 3 selected in 4(a).

 

  • The eForm will be processed by the office of Headquarters (Non STP). When an eForm is approved/rejected by the authority concerned, an acknowledgement of approval/rejection letter along with related documents if there is any is sent to the user in the form of an email to the email id of the company. Where email is not possible, a printout is generated and sent to the applicant by regular mail. Once final decision is taken, Dealing Hand prepares formal approval/ rejection order as the case may be and sent to the user.

Fees:

Application made Other than OPC & Small company OPC & Small company
(i) By a company having an authorized share capital of:a) Up to Rupees 25,00,000

b) Above Rupees 25,00,000 but up to Rupees 50,00,000

c) Above Rupees 50,00,000 but up to Rupees 5,00,00,000

d) Above Rupees 5,00,00,000 but up to Rupees 10 crore or more

e) Above Rupees 10 crore

 

2,0005,000

10,000

15,000

20,000

1,0002,500

N/A

N/A

N/A

(ii) By a company limited by guarantee but not having a share capital 2,000 N/A
(iii) By a company having a valid license issued under section 8 of the Act (Section 8 Company) 2,000 N/A

 

 

Please note: I welcome your comments and feedback. This blog post is not a professional advice. Readers may share this post on social media by using buttons given here.

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3 responses to “MR – 2

  1. Pingback: Index of Companies Law Posts | AishMGhrana

  2. Sir,

    In our case company (listed) is default in payment of debts and company appointed WTD in the board meeting. There are no profits. Now which form required to file MR-1 or MR-2??

    Pls help me..

    Like

  3. Pingback: REMUNERATION OF DIRECTORS | AishMGhrana

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