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)

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)

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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