Appointment of managing director in a public limited company

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Querist : Anonymous

Querist : Anonymous (Querist)

09 November 2013 please guide as to whether the public limited company having a paid up share capital of Rs. 50 lacs only, is required to obtain central government approval in case of excess mangerial remuneration beyond the limits laid down in schdule xiii to the companies act., 1956. will the section 269 applies in case the paid up capital of the company is below the mandatory limit of rs. 5 crore. T.S.GULATI

Ajay Mishra

Ajay Mishra (Expert)
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10 November 2013 Hi

As per section 269 (1) every public company, or a private company which is a subsidiary of a public company, having a paid up share capital of such sum as may be prescribed, shall have a managing or whole- time director or a manager.

It is mandatory provision for company covered under above otherwise it is not required to have MD/WTD/Manager.

But if you are appointing MD voluntary then you will appoint him as per section 269.

Ajay Mishra

Ajay Mishra (Expert)
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10 November 2013 Now come to the remuneration point, If you have appointed MD and you are a public company then provision of section 198 and 309 will apply to your company whether your company have paid up capital is less than 5 crores.

Subject to the provisions of section 198 and section 309, a company having profits in a financial year may pay any remuneration, by way of salary, dearness allowance, perquisites, commission and other allowances, which shall not exceed five per cent of its net profits for one such managerial person, and if there is more than one such managerial person, ten per cent for all of them together.

Your company covered under schedule XIII will take CG approval if it fall under the category mentioned therein.

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