Khushboo Maheshwari (Company Secretary) (548 Points)
18 May 2012We are stick in something. We had appointed MD as per schedule XIII at a nominal remuneration of Rs. 101 per month. This time although the remuneration is within the limit as per SEction I of Part II of Schedule XIII, but when we add sitting fees to the remuneration of our MD we are crossing the limit of this section I and falling under SEction II regarding inadequate profit. Now what should be the course of action as we don't have a remuneration committee.
Please advise its really urgent...
Ankur Garg
(Company Secretary and Compliance Officer)
(114773 Points)
Replied 18 May 2012
Sitting Fee cannot be paid to Managing Director.
Kindly note that Managing Director is not entitled by law for the payment of sitting fee. As per DCA if you want to pay sitting fee to the Managing Director then you may pay but that would be counted for the purpose of calculating the overall managerial remuneration limit. So due to DCA mandate payment of sitting fee to Managing Director is more or less payment of managerial remuneration.
So paying extra amount to Managing Director is fine but via sitting fee payment that too when you are crossing the limit of Sch XIII is not advisable at all.
Further if you still follow sitting fee path you have to bound yourself with sitting fee limits prescribed by law even if you are ready to follow Sch. XIII guidelines. Hope you are getting my point.
Regards
Khushboo Maheshwari
(Company Secretary)
(548 Points)
Replied 18 May 2012
| Originally posted by : Ankur Garg | ||
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Sitting Fee cannot be paid to Managing Director. Kindly note that Managing Director is not entitled by law for the payment of sitting fee. As per DCA if you want to pay sitting fee to the Managing Director then you may pay but that would be counted for the purpose of calculating the overall managerial remuneration limit. So due to DCA mandate payment of sitting fee to Managing Director is more or less payment of managerial remuneration. So paying extra amount to Managing Director is fine but via sitting fee payment that too when you are crossing the limit of Sch XIII is not advisable at all. Further if you still follow sitting fee path you have to bound yourself with sitting fee limits prescribed by law even if you are ready to follow Sch. XIII guidelines. Hope you are getting my point. Regards |
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First of all thanks for your reply :)
But my question here is related to year 2011 - 2012 whereby we have already paid the sitting fees to the MD alongwith other directors and now when the accounts are being finalized we have realized that we have crossed the limit of 5% of net profits and are now falling in the category of "inadequate profits". Should we approach Central Government for this increase in remuneration which is just Rs. 20,000/- for the whole year or should we constitute a remuneration committee and then rectify the payment made
Hope you are getting my problem
Nidhi Salampuria
(Company Secretary & Complaince Officer)
(48 Points)
Replied 18 May 2012
I am also facing the same issue in one of our group companies, we are paying a fix remueration to our MD. However as we are in loss this year, as per Schecule XIII, we can pay only upto 1.25 lacs per month which totals to 15 lacs a year, we are almost at double the amount, can we pass a special resolution for approving the same in our forthcoming AGM (to be held in sept 2012) with retrospectuve effect (i mean ratifying the payment thus made in FY 2011-12). please advise
Ankur Garg
(Company Secretary and Compliance Officer)
(114773 Points)
Replied 18 May 2012
| Originally posted by : Khushboo Maheshwari | ||
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First of all thanks for your reply :) But my question here is related to year 2011 - 2012 whereby we have already paid the sitting fees to the MD alongwith other directors and now when the accounts are being finalized we have realized that we have crossed the limit of 5% of net profits and are now falling in the category of "inadequate profits". Should we approach Central Government for this increase in remuneration which is just Rs. 20,000/- for the whole year or should we constitute a remuneration committee and then rectify the payment made |
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I would not advise you to go for CG approval for this kind of tiny amount. Simply use the power given in section 309(5A) and recovered the excess amount from MD and ask your account department to adjust the money. Pay this amount to your MD by any other mode like reimbursement of expenses solely incurred for office purpose.
Regards
Khushboo Maheshwari
(Company Secretary)
(548 Points)
Replied 18 May 2012
| Originally posted by : Ankur Garg | ||
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I would not advise you to go for CG approval for this kind of tiny amount. Simply use the power given in section 309(5A) and recovered the excess amount from MD and ask your account department to adjust the money. Pay this amount to your MD by any other mode like reimbursement of expenses solely incurred for office purpose. Regards |
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:)
Thanks for your reply.....
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