Director remuneration in private limited cos

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Querist : Anonymous

Querist : Anonymous (Querist)

03 July 2015 Dear colleagues

Is there any limit on the maximum remuneration which can be paid to a director in a purely private company as per Companies act 2013 and recent exemptions to PVt cos as per MCA notification.

Shall be really obliged for your help in this regard

Thanks

Ankur Garg

Ankur Garg (Expert)
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03 July 2015 Provisions related to Directors’ remuneration is governed by section 197 of the Companies Act, 2013. Section 197 is not applicable to a private company. Hence strict provisions related to Directors’ remuneration are not applicable on a private company.

You are requested to refer your Articles for any contrary provision in this regard.

Thanks

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Querist : Anonymous

Querist : Anonymous (Querist)

03 July 2015 Thanks for your response sir much appreciated.

But if we refer 197(3), there is a phrase "....... a company has no profits or its profits are inadequate...", here is a company treated as a public or a private limited company?

Thanks

Bhaskaran Chackrapani Warrier

Bhaskaran Chackrapani Warrier (Expert)
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03 July 2015 Since the subsection starts with a non-obstinate clause, a view can be taken that 'company' therein includes private as well.

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Querist : Anonymous

Querist : Anonymous (Querist)

03 July 2015
Which implies that a private limited company shall be subject to Schedule V and Section 197 even though there is an exemption under sec 196 (4) and (5).

thanks

Arpit Shah

Arpit Shah (Expert)
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03 July 2015 https://taxguru.in/company-law/appointment-remuneration-managerial-personnel-companies-act-2013.html

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Bhaskaran Chackrapani Warrier

Bhaskaran Chackrapani Warrier (Expert)
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03 July 2015 Section 196(4) shall not apply to pvt ltd company by virtue of GSR 464(E) dated 5-6-2015 meaning thereby provisions of section 197 as a whole is not applicable to pvt ltd company.

In other words,I modify my earlier observation to the extent of the view of Mr. Ankur Ji .

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Querist : Anonymous

Querist : Anonymous (Querist)

03 July 2015 Thank you Warrier sir, this was much helpful.

Thank you all!!

Ankur Garg

Ankur Garg (Expert)
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03 July 2015 Thanks Warrier Sir for sharing the logic behind my interpretation.

You have rightly quoted that MCA notification. Due to that MCA notification, 197 (all sub sections) is not applicable to a private company.

Thanks

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