Draft Special Resolution under Regulation 17(6)(e) SEBI LODR

In accordance with Regulation 17(6)(e) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015,—

The fees or compensation payable to executive directors who are promoters or members of the promoter group, shall be subject to the approval of the shareholders by special resolution in general meeting, if-

(i) the annual remuneration payable to such executive director exceeds rupees 5 crore or 2.5 per cent of the net profits of the listed entity, whichever is higher; or
(ii) where there is more than one such director, the aggregate annual remuneration to such directors exceeds 5 per cent of the net profits of the listed entity:

Provided that the approval of the shareholders under this provision shall be valid only till the expiry of the term of such director.

Explanation: For the purposes of this clause, net profits shall be calculated as per section 198 of the Companies Act, 2013.

Template of such a special resolution under regulation 17(6)(e) is given hereunder for your reference—

SAMPLE

#. To approve the continuation of payment of remuneration to Executive Directors, as per Regulation 17(6)(e) of SEBI (LODR) Regulations, 2015

To consider and if thought fit, to pass with or without modification(s), the following as a Special Resolution:

“RESOLVED THAT pursuant to Regulation 17(6)(e) of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 read with the applicable provisions of the Companies Act, 2013 and as per the recommendation of the Nomination & Remuneration Committee and the Board of Directors of the company, the consent of the members be and is hereby accorded to the continuation of payment of remuneration, as per existing terms and conditions as approved by the shareholders at the Annual General Meeting held on (Date), to Ms. ......................, Managing Director, who is a Promoter, upto (Date), and to Mr. ....................., Executive Director, who belongs to Promoter Group, upto (Date), notwithstanding that their aggregate annual remuneration exceeds 5 per cent of the net profits of the company calculated as per the provisions of Section 198 of the Companies Act, 2013.

RESOLVED FURTHER THAT the Board of Directors be and is hereby authorised to take all steps as may be necessary, proper and expedient to give effect to the foregoing Resolution.”

Explanatory Statement pursuant to Section 102(1) of the Companies Act, 2013

Item No. ...

In accordance with the provisions of Regulation 17(6)(e) of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the fees or compensation payable to executive directors who are promoters or members of the promoter group, shall be subject to the approval of the shareholders by special resolution in general meeting, if - (i) the annual remuneration payable to such executive director exceeds Rs. 5 crore or 2.5% of the net profits of the company, whichever is higher; or (ii) where there is more than one such director, the aggregate annual remuneration to such directors exceeds 5% of the net profits of the company: Provided that the approval of the shareholders under this provision shall be valid only till the expiry of the term of such director. The net profits shall be calculated as per section 198 of the Companies Act, 2013.

The Board of Directors of your company comprises of two executive directors i.e. Ms. .................., Managing Director and Mr. ....................., Executive Director, both belonging to Promoter and Promoter Group, and three other non-executive directors, i.e. Mrs. ..............., Mr. ............ and Ms. .................

The members are requested to note that the company had approved the appointment and remuneration payable to these two executive directors by way of a special resolution at the Annual General Meeting held on (Date).

A fresh approval of the members by way of special resolution is being sought for retaining all existing terms and conditions of appointment of aforesaid Executive Directors including remuneration payable to them and for payment of the aggregate annual remuneration to both these Executive Directors exceeding 5 per cent of the net profits of the company, till the expiry of their respective term which is for Ms. ............. till (Date) and for Mr. ............. till (Date), respectively.

In consideration of the continued valuable contributions of Ms. ..................... and Mr. ............................ in the growth and sustainability of the company, the proposed remuneration payment to them is justified.

Except Ms. .............. and Mr. ............., none of the other Directors/Key Managerial Personnel of the company and their respective relatives, is, in any way, concerned or interested, financially or otherwise, in the resolution set out at item no. ... of the accompanying Notice.

The Board commends the passing of the special resolution as set out at Item No. ... of the Notice for approval by the Members.



......................................................

NOTE: The resolution sample(s) here is only for reference, to help you with drafting. Do refer the exact provisions of the Act, relevant rules framed thereunder, sebi regulations and any other applicable laws to be able to not to miss out anything important while drafting.