Section 199 of Companies Act, 2013 - Recovery of Remuneration in Certain Cases

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#recoveryofremuneration

The provisions relating to the Employment and Remuneration of managerial personnel are covered in Chapter XIII of the Companies Act, 2013.

Section 199 of the Companies Act, 2013 provides for recovery of remuneration in some instances. The provisions of this section are effective from 1 April 2014.

This is a new provision added to the Act. It provides for the recovery of remuneration, including stock options, earned by the identified Managerial Personnel if the benefits provided to them are more than what is indicated in the restated financial statements.

It states that, without prejudice to any liability incurred under the provisions of this Act or any other law currently in force, if a company is required to re-state its financial statements due to fraud or non-compliance with any requirement under this Act and the Rules made there under, the company shall recover from any past or present managing director or whole-time director or manager or Chief Executive Officer (by whatever name called) who, during the period in question, was a managing director or whole-time director or manager or Chief Executive Officer (by whatever name) who received remuneration (including stock options) above what would have been payable to him under the restatement of financial statements during the period for which the financial statements are needed to be re-stated.