Companies Act Section 199 — Recovery of remuneration in certain cases
CHAPTER XIII APPOINTMENT AND REMUNERATION OF MANAGERIAL PERSONNEL
Commercial / Corporate
Summary
This section allows a company to recover excess pay from its top executives if the company has to redo its financial statements. This applies when the restatement is needed because of fraud or because the company did not follow the requirements of the Companies Act or its rules.
The recovery can be made from any current or former managing director, whole-time director, manager, or Chief Executive Officer (by whatever name they are called). The person must have received remuneration, including stock options, during the period covered by the restated financial statements. The amount to be recovered is the difference between what the person actually received and what they would have been paid according to the restated financial statements.
This recovery process does not affect any other liability the person may have under the Companies Act or any other law in force.
Official Text
Without prejudice to any liability incurred under the provisions of this Act or any other law for the time being in force, where 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 thereunder, 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 for which the financial statements are required to be re-stated, received the remuneration (including stock option) in excess of what would have been payable to him as per restatement of financial statements.