Remuneration to MD

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Querist : Anonymous

Querist : Anonymous (Querist)

17 November 2009 The remuneration to be drawn by a Managing Director cannot exceed a prescribed percentage of net profit earned by a Company. Is it 5% or 10% of net profit? Will this figure change if there is more than one Director in the Company?

Bhaskaran Chackrapani Warrier

Bhaskaran Chackrapani Warrier (Expert)
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17 November 2009 Except with the approval of central government remuneration shall nor exceed 5 % of the net profits for one such director,and if there is more than one such director, 10 % for all of them together. Ref :- proviso to section 309(3) of the companies Act,1956.

Ankur Garg

Ankur Garg (Expert)
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17 November 2009 REMUNERATION PAYABLE TO MANAGERIAL PERSONNEL BY COMPANY HAVING PROFITS

As per provisions of Section I of Part II of Schedule XIII to the Companies Act, 1956, subject to the provisions of sections 198 and 309, a company may pay any remuneration, by way of salary, dearness allowance, perquisites, commission and other allowances, which shall not exceed 5% of its net profits for one such managerial person, and if there is more than one such managerial person, 10% for all of them together. Section 309(3) provides that managerial personnel may be paid remuneration either by way of a monthly payment or at specified percentage of the net profits of the company or partly by one way and partly by the other. In case if remuneration exceeds 5% or 10% as the case may be, it cannot be paid without the approval of the Central Government.

Querist : Anonymous

Querist : Anonymous (Querist)

17 November 2009 Dear Experts,

I thank you all for the valuable information.
Regards.

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