Applicability of Section 197(5) to a private co
This query is : Resolved
Rajeshree Desai
(Querist)
08 January 2020
As per Rule 4 of The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, a company cannot pay sitting fees more than 1 lakh, which is corresponding provision to Section 197(5). Further, as per section 196(4), a private limited company is exempted from adhering to the provisions of Section 197 & Schedule V for providing remuneration to its directors, then how is suddenly Section 197(5) gets applicable to private limited company? Also, the starting statement of Section 197 is "The total managerial remuneration payable by a public company" and then all other subsections are in connection with the initial sub-section, then how Sub-section 5, out of nowhere, gets applicable to private company?
This was my understanding over sitting fees payable to a private limited company. I need to understand other expert's view in this regard, with interpretation method and supportings.
This was my understanding over sitting fees payable to a private limited company. I need to understand other expert's view in this regard, with interpretation method and supportings.
CA Mohit Bansal
(Expert)
09 January 2020
Yes. Section 197(5) is applicable to public companies only.
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