Director remuneration

This query is : Resolved

Abhinav (Querist)
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25 March 2012 1. a private limited company running from last 3 years in profit
2. Two directors are getting remuneration of Rs. 20 lacs approx.
3. Net profit after remuneration Rs. 6 lacs
4. Now they want to convert private limited into closely held public limited company
5. Can the directors continue their remuneration of Rs. 20 lacs with net profit after remuneration of Rs.6-10 lacs in closely held public limited company.

Ajay Mishra

Ajay Mishra (Expert)
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25 March 2012 Hi

As per your knowledge the provision of remuneration to director of Companies Act, 1956 will not apply to private limited company. They are free to pay any maximum amount of remuneration to their director.

In other case if such private company is a subsidiary of public company then it pay remuneration as per section 198 of the Companies Act, 1956 up to 11% of the net profit.

Regards

C A S.S.Agarwal, M.Com.,LL.B,

C A S.S.Agarwal, M.Com.,LL.B, (Expert)
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26 March 2012 In case the Private Limited is covered into a public limited then all the rules and regulation of Limited Company shall apply and the remuneration if to be paid at a higher rate then the prescribed in that case you have to procure the permission and the provisions of section 198 will apply

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