Applcable provision for director remuneration to director

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.

But these limits are not applicable to Pvt. Ltd. Companies.

Regards,

According to Section 198; The total managerial remuneration payable by a public company or a private company which is a subsidiary of a public company, to its directors and its manager in respect of any financial year shall not exceed 11% of the net profits of the company for that financial year.

But this limit is not applicable to a Pvt. Ltd. Companies.

Regards,

Strict provisions regarding managerial remuneration are not applicable to a private company. No need to intimate ROC for remuneration etc

However being a private company you are requested to check the provisions of your articles regarding remuneration.

Revert if there is any doubt.

Regards

Also find attached herewith a useful file on Managerial Remuneration. Go through the same carefully for removal of all your doubts.

Regards

I would like to ask one thing wrt the above threads regarding remuneration given to director in Pvt Ltd company.

Is section 314 applicable to pvt ltd companies?

Thanks in advance

Hello!

Sec 314 is applied to public as well as a private co.

Regards

Dear Friend

If you appoint director on place of Profit  section 314 apply. whether it is public company or private company.

Regards

But as per the companies Amendment Bill 2003 - section 314 and sub section 5 - This section is not applicable to private companies.

That's why I was asking about the applicability of the same.

according to sec 309 of companies act, remunaration paid to directors should not exceed 10% of net profit when there are more than one director.  so the remunaration to directors can be paid in ratio of 8:2 between two directors or not ? thanks

section 309(3) clearly state that when md or wtd is more than one then 10% of NP for all of them together,  so it is  not specificaly mentioned about the ratio. plz give me some referance cases. thanks

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