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CS Professional · Compliance Management, Audit and Due Diligence · Signing and Certification

Meera Foods Ltd restates its financial statements because of non-compliance with the Act. The restatement shows its managing director, who has since retired, received Rs 18 lakh of remuneration during the restated period where Rs 12 lakh would have been payable. Under section 199, what must the company do?

The company must recover Rs 6 lakh from the retired managing director. Section 199 covers past or present managing directors, wholetime directors, managers and CEOs, and requires recovery of remuneration in excess of what would have been payable on the restated financial statements.

  1. ARecover Rs 6 lakh from the retired managing directorCorrect
  2. BRecover nothing, as he is no longer in office
  3. CRecover Rs 18 lakh in full
  4. DRecover Rs 6 lakh only from the current managing director

Explanation

Section 199 requires recovery from any past or present managing director, wholetime director, manager or CEO of the excess over what would have been payable on restatement. The excess is 18 - 12 = Rs 6 lakh. Retirement does not matter, so B is wrong, and the full amount is not recoverable.

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