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Payment of commission to managing director and whole time director

Parbat (In employment) (27 Points)

04 April 2019

Dear friends,

Please share procedure for Payment of Commission to Managing Director and Whole-Time Director and Board Resolution, Limit on Commission, Provisions and all details.

Thanks in advance.

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8 Replies

CA Ankit Garg (MD | Genuine Filings) (781 Points)
Replied 04 April 2019

The commission you are talking about is Profit Linked or against any work done?

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Parbat (In employment) (27 Points)
Replied 04 April 2019

its profit linked and want to pay to md and wtd

CA Ankit Garg (MD | Genuine Filings) (781 Points)
Replied 04 April 2019

Its Public Company or Private?

Parbat (In employment) (27 Points)
Replied 04 April 2019

its Listed Company

CA Ankit Garg (MD | Genuine Filings) (781 Points)
Replied 04 April 2019

The maximum remuneration allowable is 11% with maximum of 5% remuneration to one director. However, this can be increased in GM & with approval of CG. Refer Section 197 read with Schedule V of CA, 2013 for more details.

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Parbat (In employment) (27 Points)
Replied 04 April 2019

Can we pay commission excluding salary ?

Can we pay 5% of Net Profit to Managing D and Whole-Time Director as a Commission subject to consent of members in ensuing AGM?

Is Commission will be part of remuneration and it will include in overall limit?

CA Ankit Garg (MD | Genuine Filings) (781 Points)
Replied 04 April 2019

Since, it's profit linked commission, it'll form part of remuneration & maximum remuneration shall be 5% subject to other provisions. Further, I also like to draw your attention on Sec 197(2), 197(5), 197(9) & 197(10)