limit on Director salary in Private Limited Company

I just want to update u guys, as a notification has been issued in April, 2011 the limit of Rs. 50000 in Section 314 of the companies act has been replaced with Rs. 2.5 Lacs.

Good Morning Everyone, 

I just wants to know, that what is the limit of remuneration for the Directors of a Pvt. Company? Is any section deals with Remuneration to Directors of Pvt. Company, also want to know is any approval of Central Govt. require for such remunaration? 

Thanks& regards

There is  no limit on the remuneration for the Directors of a Pvt. Company.

Section 314 is applicable when anything is paid to director over and above in his capacity of director. 

CG approval is not required.

Hello Ms. Neha, 

Over and above his capacity means exactly what?

Regards, 

If payment to director is made for any other service rendered by him like adivsory, consultancy, etc.

DEAR ALL,

                      A DIRECTOR WHO HAPPENS TO BE A WEB DESIGNER FALLS UNDER THE PURVIEW OF SEC.314 AND IS ELIGIBLE TO A SALARY OF 5OK PERMONTH WITHOUT CENTRAL GOCERNMENTS APPROVAL. HE CAN ALSO RECIEVE ADDITIONAL REMUNERATION FOR CARRYING OUT WEB DESIGNING WORK WHICH IS IN NO  WAY AFFECTED BY SEC.314.

REGARDS

TANVEER

Dear All,

This Section 314 is a very important section so far as we PCS are concerned especially in case of a private limited company.

I went through the interesting discussions and views in this forum.

My view in this matter is as follows, experts please correct me if I'm wrong:

Section 314 (1) requires Sp. Resolution in Gen. Meeting where remuneration is paid to DIRECTOR (over and above his/her remuneration as director) or PERSONS RELATED TO DIRECTOR of Rs.50000/- pm (any amount) or more (enhanced from Rs.10000/- pm earlier).

Section 314 (1B) (please note the difference) requires CENTRAL GOVERNMENT APPROVAL where remuneration is paid to PERSONS RELATED TO DIRECTOR (again please note the difference) of Rs.250000/- pm or more (enhanced from Rs.20000/- pm earlier).

It is therefore, not required for a Director to obtain Cent. Govt. Approval for remuneration of any amount-however Sp. Res. is a must if his/her remuneration is Rs.50000/- pm or more.

For Persons Related to a Director (earlier there was a debate whether this meant a Director holding Off of Profit, which was settled by SC decision), the appointment/remuneration needs to be approved by Sp. Resolution passed by shareholders in general meeting if his/her remuenration is Rs.50000/- pm or more PLUS CENTRAL GOVERNMENT APPROVAL if this remuneration is Rs.250000/- pm or more.

Also, in case of a director Section 314 (1) applies if remueration is paid for remuneration over and above that as a director. This is a very grey area as it has not been clearly defined in the Act nor by precedents what remuneration as a director means as a director can/will also be handling day-to-day business.

The jury is still out-this continues to remain a grey area. It is a good thing, however, that MCA has finally realised that their earlier limits were ridiculously low (Rs.10,000/- pm & Rs.20,000/- pm).

I just want to ask anybody who can answer me...

If the director holds majority shares of the the company, then 

Can auditor question on director remuneration if he is getting 60 lacs p.a and if yes, according to which section???

payment of remuneration to a director ina private ltd company  comes under sec.314 of the companies act , 1956 wherein a remuneration of Rs.400000 can be paid without obtaining approval from the central government. In a public ltd company it is governed by schedule xiii.

Regards

Tanveer Md Masood

In private company the compay are free to pay any remuneration to its directors because the provisions of remuneration of the Companies Act, 1956 is not applicable.

However, section 314 is only talk about over and above of managerial remuneration of director. if the director take remuneration and he appointed as another post and get any money in additional to director remuneration then such additional money will be count for and not remuneration of director.

Auditor can not question in case remuneration is not hit by provisions of AOA and is paid after obtaining requisite approval of general meeting.

Regards

Updating sometimes help in having So much clarification .Thanks for the update and clarification to both Neha Madams.

THANKS FOR CLARIFICATION

There is no provision in incom tax to question it like for provision of specified person..

and salary to a director should be given as lumpsum fees or  can be bifurcated like medical allowance, basic salary, special allowance for both managerial and whole time director or any other director..

in our PVT LTD COMANY 4 DIRECTORS SALRY IS PAYABLE BUT IT REMAIN PENDING AS ON 31.03.2013. WE ARE PLANNING TO ISSUE SHARE AGAINST OUTSTANDING SALARY. IS IT POSSIBLE AS PER LAW.