oppn parties Good Companies Free To Raise Salaries Without Threshold If Shareholders Permit

News Snippets

  • Supreme Court warns Rahul Gandhi to be more careful in future but drops contempt proceedings in the "chor" case
  • In a flip-flop, Vodafone CEO says sorry to the government, sys no plan to exit India
  • Sabarimala case referred to a larger bench as the court says several contentious issues need deeper examination
  • 16 killed as the vehicle they were traveling in plunged into a deep gorge near Jammu
  • Vodafone CEO seeks government relief, saying India operations on the verge of collapse
  • Three teenagers killed in a major accident in Kolkata's New Town area when their Honda City rammed into a road divider and a Metro pillar. The car was mangled
  • Vishwa Hindu Parishad not to publicly 'celebrate' Babri Masjid demolition day this year, all events will be closed door
  • JNU students march against the steep hike in fees, keep HRD minister Ramesh Pokhriyal stuck at the venue of the convocation
  • USFDA says Cytotron, an anti-cancer kit developed by Bengaluru based Rajah Vijay Kumar, is a "breakthrough device" for treating liver, pancreatic and breast cancers
  • Car sales show a minuscule uptrend after declining continuously for 11 months
  • Industrial output contracts by 4.3% in September, the worst decline in 8 years
  • Centre defends abrogation of Article 370 in the Supreme Court, says the power under it was used by the President six times previously
  • Legendary singer Lata Mangeshkar admitted to hospital with lung infection, put on ventilator
  • Shiv Sena MP Arvind Sawant quits as Union Minister
  • National Security Advisor Ajit Doval met the leaders of both Hindus and Muslims in Delhi on Sunday to ensure peace and harmony is maintained after the Ayodhya verdict
Supreme Court dismisses plea for review in Rafale case, says no need for roving inquiry, maintains clean chit to government
oppn parties
Good Companies Free To Raise Salaries Without Threshold If Shareholders Permit

By A Special Correspondent

In this age of extreme competition, too many business entities are chasing too few talented people. Hence, it has become a difficult task to recruit and then retain employees. This is especially true when it comes to the higher levels. Also, employee recruitment is a very time consuming and costly affair. Things go out of gear if a top level employee leaves and a replacement is not found soon. Although money is not always the top reason why people leave, it is one of the biggest factors. Companies were hitherto bound by the government regulation that prevented them from raising the cumulative salaries of their employees beyond the threshold of 11 percent of net profits without the permission of the ministry of corporate affairs. But this has now changed.

Companies that have not defaulted on payment of dues to a bank, other secured creditors and non-convertible debenture holders will now be able to raise the salaries beyond the threshold without seeking government permission by just getting a nod from the shareholders. This will also empower the shareholders. Defaulting companies however, will still have to seek government permission before seeking shareholder nod.

This is the latest move in a series of moves the government has taken recently to remove unnecessary hurdles in the working of good companies and in empowering shareholders. There are still many areas where companies need to take permission from the government. The ministry must identify these and do away with the ones that are not necessary. However, shareholder empowerment is meaningless if not accompanied by tightening of corporate governance rules as the views of minority shareholders are almost never given any importance in closely held companies and resolutions are pushed through by brute numbers.