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What is Form MR-1?
MR-1 is the e-form filed with the RoC under Section 196 and 197 of the Companies Act, 2013, for:
- Appointment of Managing Director (MD)
- Appointment of Whole-Time Director (WTD)
- Appointment of Manager
- Change in terms of appointment
- Re-appointment
- Variation of remuneration
Note: MR-1 is for executive directors (MD/WTD/Manager). Regular non-executive directors\' appointments use DIR-12 (without remuneration filing).
When MR-1 is mandatory
File MR-1 in these cases:
- Fresh appointment of MD/WTD/Manager (within 60 days of appointment)
- Re-appointment at expiry of previous term (within 60 days)
- Variation in terms of appointment or remuneration (within 60 days of change)
- Appointment in companies where Section 196-197 limits are exceeded (requires Central Government approval — first MR-1 then MR-2)
Public companies need MR-1. Pvt Ltd companies are EXEMPT from filing MR-1 unless they are subsidiaries of public companies. Section 197 limits also don't apply to Pvt Ltds (they can pay any reasonable remuneration without ceiling).
Section 197 remuneration limits (Public Cos)
For public companies, Section 197 caps total managerial remuneration:
- Overall limit: 11% of net profits (computed under Section 198) for all directors combined
- MD/WTD/Manager (one) — Up to 5% of net profits
- Two or more MD/WTD/Manager — Up to 10% of net profits combined
- Other directors (non-executive) — Up to 1% of net profits combined
- If profits inadequate or no profits — Schedule V limits apply (slab-based on effective capital)
Exceeding these limits requires special resolution + Central Govt approval (via MR-2 along with MR-1).
Documents required
- Board/EGM resolution approving appointment and remuneration
- Letter of appointment specifying terms
- Consent letter from appointee
- Details of remuneration package (salary, perquisites, commission, ESOPs)
- Section 197(1) compliance certificate (for public companies)
- For exceeding limits: Schedule V Part I/II details, shareholder approval, CG approval (if needed)
Pvt Ltd — When you don't need MR-1
Good news for Pvt Ltd companies:
- MR-1 not mandatory for Pvt Ltd appointments (except subsidiaries of public companies)
- No Section 197 remuneration ceiling — Pvt Ltd can pay any salary approved by shareholders
- DIR-12 is sufficient for any director change in Pvt Ltd
- For tax purposes — Director's salary is taxable income; company pays TDS u/s 192
However, Pvt Ltds must still maintain proper board resolutions and salary documentation. Income tax authorities can disallow excessive remuneration as not for business purposes.