Remuneration to md - schedule xiii - urgent

This query is : Open

Querist : Anonymous

Querist : Anonymous (Querist)

15 March 2012 A Ltd, unlisted company wants to pay remuneration of Rs. 3.5 lacs (salary 2lac+ commission 1 lac) to MD. However their effective capital is less than 15 crores.
Is central govt approval is required for payment of remuneration?

Kindly consider the latest notification and suggest me regarding the same.

Ajay Mishra

Ajay Mishra (Expert)
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16 March 2012 Hi

In your case you are covered in Clause (B) of Section II of Schedule XIII of the Companies Act, 1956.

If you are paying commission of 1% of net profit, then there is no need to obtain CG approval if the company has MD or WTD as per latest Circular No. 4/2011.

Regards

Querist : Anonymous

Querist : Anonymous (Querist)

16 March 2012 Thanks for the reply sir.

That circular is applicable for payment of commission to non whole time director.

As I said earlier we are paying commission of fixed amount and remuneration is calculated as per Sch XIII on effective capital basis not on net profit.

And as per latest notification, GSR 70(E)dated 8.02.2011, the CG approval is not required for unlisted company for payment of remuneration in excess of scale covered under clause (c) of Section II.

Is this means the payment of remuneration in excess of scale covered under clause (B) of Section II requires CG approval?

Kindly explain in detail

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