17 August 2009
I would like to know, If company makes profit, what is maximum remuneration payable to managerial person. i.e (M.D., W.T.D, manager)as per act.
Further, if company makes profit, is it mandatory for company to comply the limits set in part II of shedule xiii for fixing managerial remuneration without approval of Central Govt. or Company needs to comply the limits set in part II of shedule XIII for fixing managerial remuneration without approval of central Govt, only if it has less profit or loss.
But then what is the maximum limit stated in provision of section 198 and 309 for managerial remuneration i.e 11% of net profit and if remuneration exceeds above limit company needs to take approval from Central Government.
18 August 2009
Total ceiling of managerial remuneration Section 198(1) relates to overall maximum managerial remuneration and managerial remuneration in case of absence or inadequacy of profits. The total managerial remuneration payable by a public company or a private company which is a subsidiary of a public company, to its directors and its manager in respect of any financial year shall not exceed 11% of the net profits of the company for that financial year. Such net profits shall be computed in a manner laid down under sections 349 and 350, except that the remuneration of the directors shall not be deducted from the gross profits. Remuneration is payable to all the directors including managing and whole-time directors and in any capacity. Therefore, it includes the remuneration for services rendered by him in any other capacity other than that of a director.
18 August 2009
REMUNERATION PAYABLE TO MANAGERIAL PERSONNEL BY COMPANY HAVING PROFITS
As per provisions of Section I of Part II of Schedule XIII to the Companies Act, 1956, subject to the provisions of sections 198 and 309, a company may pay any remuneration, by way of salary, dearness allowance, perquisites, commission and other allowances, which shall not exceed 5% of its net profits for one such managerial person, and if there is more than one such managerial person, 10% for all of them together. Section 309(3) provides that managerial personnel may be paid remuneration either by way of a monthly payment or at specified percentage of the net profits of the company or partly by one way and partly by the other.
In case if remuneration exceeds 5% or 10% as the case may be, it cannot be paid without the approval of the Central Government.
18 August 2009
REMUNERATION PAYABLE TO MANAGERIAL PERSONNEL BY COMPANY HAVING NO PROFITS OR INADEQUATE PROFITS
Section II of Part II of Schedule XIII to the Companies Act, 1956 relates to remuneration payable to managerial person i.e., a managing or whole-time director or a manager by companies having no profits or inadequate profits. Following are the worth noting points in regard to payment of remuneration by companies having no profits or inadequate profits for appointment of a managerial person under the provisions of Schedule XIII to the Companies Act, 1956.
Meaning of 'no profit' or 'inadequate profit'
If in any financial year, a company has suffered losses or the profit of the company computed in the manner laid down in sections 349 and 350, except that the remuneration of directors shall not be deducted from the gross profit, is less than the overall managerial remuneration payable under the provisions of section 198 read with the provisions of section 309 of the Act, shall be considered as 'no profit' or 'inadequate profit'. It means that the remuneration payable to the managerial person is more than 5% of the net profit in case of one managerial person or more than 10% of the net profit in case of more than one managerial person.
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