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CS Professional · Compliance Management, Audit and Due Diligence · Compliance Framework

A company secretary reviewing compliance at Lotus Retail Ltd. notes that the company restated its statements for non-compliance with the Act. The Nomination and Remuneration Committee argues that Section 199 recovery is optional and left to its remuneration policy. How should the secretary advise?

Recovery is mandatory. Section 199 says the company shall recover the excess remuneration, and it operates without prejudice to any other liability under the Act or other laws. It is neither discretionary under the remuneration policy nor a substitute for other consequences.

  1. ARecovery is discretionary and depends on the remuneration policy under Section 178
  2. BRecovery is mandatory as the section says the company shall recover, and it applies without prejudice to other liabilitiesCorrect
  3. CRecovery replaces any other liability, so no penalty can follow
  4. DRecovery arises only if shareholders pass a special resolution

Explanation

Section 199 uses 'shall recover' and operates without prejudice to any liability under the Act or any other law. So it is mandatory and is additional to other liabilities. The remuneration policy under Section 178 does not make it optional.

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