The Ministry of Corporate Affairs notified the 18th March, 2021 as the effective date for implementation of changes in provision of Independent Director and Remuneration to Directors inserted by Companies (Amendment) Act, 2020.
“In exercise of the powers conferred by sub-section (2) of section 1 of the Companies (Amendment) Act, 2020 (29 of 2020), the Central Government hereby appoints the 18th March, 2021 as the date on which the provisions of section 32 and section 40 of the said Act shall come into force,” the notification said.
Section 32 of the Companies (Amendment) Act, 2020 seeks to amend Section 149 of Companies Act, 2013 wherein a proviso was added which says, “”Provided that if a company has no profits or its profits are inadequate, an independent director may receive remuneration, exclusive of any fees payable under sub-section (5) of section 197, in accordance with the provisions of Schedule V.”
A new proviso which provided that an independent director may receive remuneration, if a company has no profits or inadequate profits in accordance with Schedule V of the Act.
Section 40 of the Companies (Amendment) Act, 2020 seeks to amend Section 197 of Companies Act, 2013 in sub-section (3), after the words “whole-time director or manager,”, the words “or any other non-executive director, including an independent director” shall be inserted.
In other words, if a company fails to make profits or makes inadequate profits in a financial year, any non-executive director of such company, including an independent director, shall be paid remuneration in accordance with Schedule V of the Act.
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