Director remuneration in all companies

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

02 December 2016 Dear All
Mr. X is director in three pvt. Ltd. Companies however Now he is going take the dirctorship in one more pvt. Ltd. Company. He has been drawing Rs. 3 Lakh remuneration in all three earliers companies. From forth company he is going to draw the remuneration of 3.5 Lakh pls clarify in this scenario weather he can accept the remuneration of 3.5 Lakh from forth company or not......

Thanks & Regards
Sudheer Chauhan

Jatin Bajaj

Jatin Bajaj (Expert)
Follow

02 December 2016 YES, AS PER SECTION 197 OF THE COMPANIES ACT 2013, READ WITH SCHEDULE 5, PART 2 OF THE COMPANIES ACT , HE CAN DRAW THE REMUNERATION FROM ALL THE 4 COMPANIES BUT THE AGREGATE OF SUCH REMUNERATION SHALL NOT EXCEED 3.5 LAKH

Bhaskaran Chackrapani Warrier

Bhaskaran Chackrapani Warrier (Expert)
Follow

02 December 2016 @ Jatin Ji

All Co's are Pvt Ltd. Then whether section V of part II of Sch V applies or not.

Querist : Anonymous

Querist : Anonymous (Querist)

02 December 2016 Dear Jatin sir
I am bit confused on this line but the agregate of such remuneration shall not exceed 3.5 Lakh. Pls do clarify with an example if possible....

Thanks In Advance

Jatin Bajaj

Jatin Bajaj (Expert)
Follow

02 December 2016 AS, RIGHTLY POINTED OUT BY CHACKARPANI SIR,
SECTION 197 IS NOT MANDATORY FOR PRIVATE LIMITED COMPANIES, SO FOURTH COMPANY CAN DRAW REMUNERATION OF 3.5 LAKH.
BUT FOR PUBLIC COMPANIES
SUPPOSE DIRECTOR A DRAWS REMUNERATION FROM COMPANY A , B , C AMOUNTING TO RS. 1 LAKH, 3 LAKH, 5 LAKH RESPECTIVELY. THEN MAXIMUM REMUNERATION HE CAN DRAW SHALL NOT EXCEED 5 LAKH IN AGREGATE FROM ALL THE COMPANIES

Querist : Anonymous

Querist : Anonymous (Querist)

02 December 2016 Dear Jatin sir
In your example Mr. A is drawing remuneration from companies A, B, C amounting to 1 Lakh, 3 Lakh, 5 Lakh total 8 Lakh? Does that means Mr. X cannot accept the remuneration exceed 5 Lakh from all three companies if yes then as per your example why he is already drawing 1 lakh, 3 Lakh, 5 Lakh total 8 Lakh?

Pls clarify this confusion.....

Querist : Anonymous

Querist : Anonymous (Querist)

02 December 2016 Sorry.....
pls consider total 9 Lakh remuneration instead of 8 Lakh?

Saket Agarwal

Saket Agarwal (Expert)
Follow

04 December 2016 With all due respect, I fail to see how Section V of Part II of Schedule V applies in the given situation.

The query does not mention whether the directors in question are managing directors ("MD") or whole time directors ("WTD"). Does Section 196 or 197 or Schedule V apply to ordinary directors? I am under the impression, they do not.

Even if these provisions did apply to ordinary directors of a private limited company, Section V of Part II of Schedule V simply states "a managerial person shall draw remuneration from one or both companies, provided that the total remuneration drawn from the companies does not exceed the higher maximum limit admissible from any one of the companies of which he is a managerial person". Hence we have to compute the "maximum limit admissible" for each company and then see what is the highest of them all. This highest has to be compared to the aggregate that the director is getting from all the companies.

I fail to see how Jatin ji above has reached the conclusion that the director should not be paid more than Rs.3.5 Lakhs. I apologize in advance if I am missing something.

CS Nagesh Rudrakanthwar

CS Nagesh Rudrakanthwar (Expert)
Follow

08 December 2016 With due respect to all Experts. Said query is with respect to Pvt company and Sec 197 and Schedule V except part I is not at all applicable to pvt companies. Hence there is no any restriction for paying managerial remuneration.