Ok ROC called this company as sick because the director Ian getting remunerated above the legal law
According to second proviso to section 197(1)(i) of the Act, except with the approval of the company in general meeting, the remuneration payable to any one managing director; or whole time director or manager shall not exceed 5% of the net profits of the company and if there is more than one such director remuneration shall not exceed 10% of the net profits to all such directors and manager taken together. However, in case of these limits can be paid with the approval of the members of the company by passing a special resolution and prior approval of any bank or public financial institution or non-convertible debenture holders or any other secured creditor is also required in case of defaulting company, but subject to the upper limit of is for public limited.
Hence, directors remuneration is a good tax planning and a private company director can withdraw any amount. If that company is classified as sick, on what parameters?