managerial remuneration

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CS Seema (Querist)
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10 October 2010 can a company give its managing director more than 5% of its profit without obtaining central government approwal

Ankur Garg

Ankur Garg (Expert)
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11 October 2010 In a private company it is possible.

In a public company it is not possible, especially if company is a profit making company.

However if you choose the route of sch XIII i.e. inadequacy of profit then you have to observe the conditions of sch XIII.

Regards

Ajay Mishra

Ajay Mishra (Expert)
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11 October 2010

The provisions of managerial remuneration is not applicable to private limited company.

In case of public company or subsidiary private company the provisions of managerial remuneration will be applicable.
Section 198, and 309 will apply to public company and subsidiary private company.

In you are paying remuneration in excess of the limit specified in above sections, in that case you comply the provision of Schedule XIII of the Companies Act, 1956 and take additional CG approval along with shareholders approval.

Regards

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