Section 199 of the Companies Act, 2013
Section 199 of the Companies Act, 2013 deals with the power of the company to recover remuneration from its managing director (MD), whole-time director, manager, or key managerial personnel (KMP) in certain cases.
🔹 Section 199 – Recovery of Remuneration in Case of Fraud or Misstatement
🟡 Key Provisions:
Clawback of Remuneration:
If a company is required to restate its financial statements due to:
Fraud, or
Non-compliance with any requirement of the Companies Act, 2013,
Then the company shall recover from its MD, WTD, manager, or any other KMP:
The excess remuneration (including stock options) paid to them based on such incorrect financial statements.
Applies to:
Managing Director (MD)
Whole-time Director (WTD)
Manager
Any other Key Managerial Personnel (KMP)
Nature of Recovery:
The company may claw back:
Salaries
Bonuses
Perquisites
Stock options
Which were paid on the basis of misstated financial results.
✅ Objective:
To hold top management accountable for fraudulent or erroneous financial statements and prevent them from unjust enrichment at the cost of the company and shareholders.
ilar provisions
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