30 June 2012
According to Section I of Part II of Schedule XIII, a co. having profits in a F.Y. may pay any remuneration, by way of salary, D.A., 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 II of Part II of Schedule XIII,govern the cases in case of absence or inadequacy of profit & has mentioned the different ceiling limits calculated on the effective capital of the company
The provisions contained in Section 198 and 269 read with Schedule XIII are applicable only to (a) a public limited company and (b) a private limited company, which is subsidiary of a public Company.
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.
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