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Remuneration to directors of a pvt ltd company

mahipal m. chande (ca) (216 Points)

25 November 2016

how many number of directors a pvt ltd can have?

can a pvt ltd company pay unlimited remuneration to its directors?

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10 Replies

CA. Punith Harish (PRACTICING CHARTERED ACCOUNTANT) (445 Points)
Replied 25 November 2016

minimum 2 director maximum 15, company may appointment more than 15 director also but special resolution is required for the same.
private limited company may pay remuneration to director by passing ordinary resolution,

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mahipal m. chande (ca) (216 Points)
Replied 26 November 2016

IS THERE ANY LIMIT IF PROFIT IS SUFFICIENT?

CA. Punith Harish (PRACTICING CHARTERED ACCOUNTANT) (445 Points)
Replied 26 November 2016

Sec. 197 talk about celling limit for director remuneration but sec 197 is not applicalbe to Private Limited Company.

Jatin Bajaj (CS) (2930 Points)
Replied 26 November 2016

ACCORDING TO SECTION 152 OF THE COMPANIES ACT, A PRIVATE COMPANY CAN HAVE MINIMUM 2 DIRECTORS AND MAXIMUM 15 DIRECTOR. IF COMPANY WANTS TO APPOINT MORE THAN 15 DIRECTORS, THEN COMPANY SHALL PASS SPECIAL RESOLUTION IN THE GENERAL MEETING.

AND FOR REMUNERATION , A PRIVATE COMPANY CAN PAY ANY REMUNERATION TO DIRECTORS BECAUSE AS PER SECTION 197 OF THE COMPANIES ACT , CEILING LIMIT ON REMUNERATION TO DIRECTOR IS 11% OF THE NET PROFIT OF THE COMPANY IN A SINGLE FINANCIAL YEAR WHICH SHALL ONLY BE APPLICABLE TO PUBLIC LIMITED COMPANY

mahipal m. chande (ca) (216 Points)
Replied 30 November 2016

that mean if pvt ltd company earns rs 1 cr as profit then it can pay entire amount to its say 10 directors without any restriction?

divididend distribution not reqired at all?

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CA. Punith Harish (PRACTICING CHARTERED ACCOUNTANT) (445 Points)
Replied 30 November 2016

there is no calling limit for director remuneration in pvt Ltd company so you can pay any amount of remuneration to director just passing resolution, but it will be problem under Income tax u/s 40A unreasonable amount to related party there unreasonable amount will get disallowed.

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