Remuneration to directors

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Neha Khunteta (Querist)
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11 July 2012 Hiiiii,

In a public Limited Company, remuneration is paid to directors without assigning the nomenclature of MD/WTD and the net profits of the Company are inadequate.

Pls clarify what are the consequences for that?

Ajay Mishra

Ajay Mishra (Expert)
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11 July 2012 Hi

It will be approved by shareholders in accordance with the provision of section 109 read with 309 of the Companies Act and it will be part of explanatory statement of notice of General Meeting.

Whether you have complied this or not.

Neha Khunteta

Neha Khunteta (Querist)
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11 July 2012 Thanks Ajay sir,

But the Company has no profits, how can it proceed in Section 309 of Companies Act?

Ajay Mishra

Ajay Mishra (Expert)
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11 July 2012 Hi

If the Companies has inadequate profit or no profit then it will govern by Schedule XIII of the Companies Act, 1956 which specify the limit up to which you can pay remuneration to director/manager.

Neha Khunteta

Neha Khunteta (Querist)
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11 July 2012 But Schedule XIII is applicable when there are MD/WTD in the Company.

There are no such directors in the Company.

Ajay Mishra

Ajay Mishra (Expert)
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11 July 2012 Hi

No, Schedule XIII will apply to all managerial person and it includes MD/WTD and other director. Part Iid applicable only to MD/WTD/MANAGER.

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