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MANAGERIAL REMUNERATION

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Querist : Anonymous

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Querist : Anonymous (Querist)
29 June 2010 FACTS
The company proposes to pay royalty @4% of the net profits to one ordinary director for the purpose of using the trademark held in his name.

Presently the board comprises more than one Whole time directors and remuneration is paid to them.

The querry is whether the aforesaid royalty to be paid to the director to be included in the ceiling limit of remuneration given under section 198,349 & 350. (i.e.As per sec. 198 11% of net profits and as per sec. 309 1% )

Whether the said royalty can be considered as commission. If it can be so considered as commission, i understand that only special resolution is required and CG approval not required as it cannot be considered as monthly, quarterly, annual payment. Pl. advise on the same.
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jegannath G

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jegannath G (Expert)
29 June 2010 Even the royalty paid to director is only a remuneration paid and hence the ceiling undre the section 198 , 349 & 350 will apply
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