Managerial Remuneration

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CS Sandip Rahane (Querist)
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01 April 2011 Dear Sir,

We r a ltd. company, paying remuneration to director without C.G. approval.
I wnt to know that, Leave encashment, performance bonus, PF, Gratuity is included in the Managerial remuneration u/s 309 for calculating the limit?

Wht is the limit for Managerial remuneration in the act?

Plz reply.

THx.

Rasesh

Rasesh (Expert)
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01 April 2011 Please refer Para 2 of Part II of Schedule XIII which specifies the components which are to be excluded from the computation.

1) Contri to PF, superannuation fund
2) Gratuity equal to half month's salary for each completed year of service
3) Leave Encashment at the end of the tenure.

Jayashree S Iyer

Jayashree S Iyer (Expert)
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04 April 2011 For limits on managerial remuneration, please refer to Section 198, 309, and Schedule XIII of the Companies Act, 1956.

Profit making companies -

As per Section 198,

Overall managerial remuneration should not exceed 11% of the net profits of the company.

As per Section 309,

the remuneration to WTD / MD should not exceed 5% of the net profits for one such director and 10% for all of them together.

the remuneration of a non-executive director should not exceed 1% of the net profits if the company has a MD or WTD and 3%, in any other case.

Companies having inadequate profits or no profits

As per limits specified in Part II of Schedule XIII.

Payments beyond these limits require CG approval.