06 February 2010
hello, my query is that what is the provision of remuneration to a director of a public limited compnay and can the copmany pay remuneration to the wife of same director?
06 February 2010
The maximum remuneration paid by a public company to all the directors shall not exceed 11% of Net profits of the company. It does not include the sitting fees paid to the director for attending the meetings. These require simple resolution in Board meetings, if they are within the limits of these sections otherwise approval of C. Govt. is required. (Relevant Sections 198 & 309) Yes, the company can pay remuneration to the wife of the director if the amount is within the prescribed limit (My knowledge, the limit is Rs.50,000). Otherwise, prior consent of the company by special resolution and the approval of the Central Government is required, in case the remuneration exceeds the prescribed limits. {Relevant Sections 314(1B)}
07 February 2010
As rahul has covered most of points, i want to add something in it. In case the public company is profit generating means the company have profits then in that case 11% of the profits without allowing remuneration under sec 349 and 350 of the Companies Act, 1956 is maximum limit. In case its loss making companies, the slabs would apply as given in schedule XIII or have to take approval of central government to make payment of managerial remuneration to directors If the company is making any payment to relative of directors or any relative of director holds the place of profit then according to sec 314 the company has to obtain the prior consent of the company by passing special resolution and have to disclose in the annual report of the company. It does not make difference wife of director hold place of profit as director or through some other post. If wife of director have some professional qualification, she should paid according to industry norms. But still she holds a place of profit and has to disclose in annual report and have to obtain the consent by passing spcl. resolution.
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