Salary of a director/ m.d.

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

16 January 2014 In how many companies a person be a director, separetely in public limited and private limited companies.

How much salary a person can withdraw from a company in a financial year as a director and as an M.D.

From how many companies a person can take salary or managerial remuneration.

CA.Chandankumar

CA.Chandankumar (Expert)
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16 January 2014 As per New cos. Act,2013, No person, after the commencement of this Act, shall hold office as a director,
including any alternate directorship, in more than twenty companies at the same time:
Provided that the maximum number of public companies in which a person can be
appointed as a director shall not exceed ten.
Explanation.— For reckoning the limit of public companies in which a person can be
appointed as director, directorship in private companies that are either holding or subsidiary
company of a public company shall be included.

The total managerial remuneration payable by a public company, to its directors,
including managing director and whole-time director, and its manager in respect of any
financial year shall not exceed eleven per cent. of the net profits of that company for that
financial year computed in the manner laid down in section 198 except that the remuneration
of the directors shall not be deducted from the gross profits:
Provided that the company in general meeting may, with the approval of the Central
Government, authorise the payment of remuneration exceeding eleven per cent. of the net
profits of the company, subject to the provisions of Schedule V
Provided further that, except with the approval of the company in general meeting,—
(i) the remuneration payable to any one managing director; or whole-time director
or manager shall not exceed five per cent. of the net profits of the company and if there
is more than one such director remuneration shall not exceed ten per cent. of the net
profits to all such directors and manager taken together;
(ii) the remuneration payable to directors who are neither managing directors
nor whole-time directors shall not exceed,—
(A) one per cent. of the net profits of the company, if there is a managing
or whole-time director or manager;
(B) three per cent. of the net profits in any other case.
(2) The percentages aforesaid shall be exclusive of any fees payable to directors under
sub-section (5).
(3) Notwithstanding anything contained in sub-sections (1) and (2), but subject to
the provisions of Schedule V, if, in any financial year, a company has no profits or its profits
are inadequate, the company shall not pay to its directors, including any managing or wholetime
director or manager, by way of remuneration any sum exclusive of any fees payable to
directors under sub-section (5) hereunder except in accordance with the provisions of
Schedule V and if it is not able to comply with such provisions, with the previous approval
of the Central Government.