Increase in managerial remuneration beyond statutory limit

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CS YPN (Querist)
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16 September 2011 Hello friends

Can Public profit making company having 4 directors increase its managerial remuneration beyond statutory limit u/s198 i.e. above 11%of net profit? &
What are the procedure and resolutions required?

CS Suraj Arora

CS Suraj Arora (Expert)
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17 September 2011 Dear Yuti

Please take note that plain reading of the section 198 sub section 1 of the Companies Act 1956 provides overall maximum managerial remuneration i.e.11% of the net profit computed according to section 349-350 of the Act.

So in your case a company can not give remuneration beyond 11% of the net profit.

Even provisions of section 309 (1) are subject to provisions of section 198.

As far as Approval of Central Govt is Concerned they are for MD/WTD Which also subject to overall limit up to 11%.

I hope your query is solved.