Director remuneration

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Abhinav (Querist)
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24 March 2012 is the clause of managerial remuneration of maximum 11% of profits applicable to a limited company not having any public issue???????

Ajay Mishra

Ajay Mishra (Expert)
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25 March 2012 Hi

Yes,

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.

Regards

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