directirs remuneration

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ajay arora (Querist)
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07 August 2010 a person is appointed as managing director in two different Companies and intend to draw remuneration in both the Companies, How his remuneration ( with limits as per schedule XIII)would be decided in both the Companies
can a person be a managing director of the company without getting any remuneration from it.

CMA. CS. Sanjay Gupta

CMA. CS. Sanjay Gupta (Expert)
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07 August 2010 Total ceiling of managerial remuneration

Section 198(1) relates to overall maximum managerial remuneration and managerial remuneration in case of absence or inadequacy of profits. The total managerial remuneration payable by a public company or a private company which is a subsidiary of a public company, to its directors and its manager in respect of any financial year shall not exceed 11% of the net profits of the company for that financial year. Such net profits shall be computed in a manner laid down under sections 349 and 350, except that the remuneration of the directors shall not be deducted from the gross profits.

Remuneration is payable to all the directors including managing and whole-time directors and in any capacity. Therefore, it includes the remuneration for services rendered by him in any other capacity other than that of a director.

But this provision is not applicable to a Pvt Ltd Company which is not a subsidiary of a Public Limited company.

The remuneration will be decided by company applying sec. 198 separately. subject to this there is no other restriction. If yours is a pvt ltd company then no restriction at all. Both company will decide separately. It does not matter to a company what the other company, in which he is a managing director, pays him.

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