Section 200 of the Companies Act, 2013
Section 200 of the Companies Act, 2013 deals with the “Central Government or Tribunal to fix a limit with regard to remuneration” payable to directors and others in certain cases.
📜 Section 200 – Central Government or Tribunal to Fix Remuneration Limits
🔹 Purpose:
This section allows the Central Government or the Tribunal (National Company Law Tribunal – NCLT) to regulate or restrict the remuneration payable to:
Directors
Managing Directors
Whole-time Directors
Managers
🔹 Scope of Application:
The section applies in the following cases:
When the Central Government approves the remuneration under Section 196 (appointment of MD/WTD/manager).
When the Tribunal is dealing with matters related to mismanagement, oppression, etc., and it deems it necessary to fix limits on remuneration to protect the interest of the company/shareholders.
✅ Key Points:
The Central Government or NCLT may:
Fix the amount of remuneration, or
Specify limits or conditions under which remuneration can be paid.
This is often used in situations where:
A company is in financial difficulty.
There is a dispute involving management misconduct.
The company is under investigation or revival process.
⚖️ Objective:
To prevent misuse of company funds through excessive or unfair compensation.
To ensure fair corporate governance and protection of minority shareholders.
🧾 Example:
If a company is found involved in fraudulent activities or serious financial mismanagement, the Tribunal (NCLT) may limit the salary of its managing director as part of corrective action under this section.
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