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Query regarding remuneration of managing director in case of

Pushkar (Assistant) (28 Points)

24 July 2014

Dear all,

I have a query regarding remuneration of managing director in case of Public Company.

Can a Public Company pay Rs 1,00,000 p.m remuneration to its Managing Director if it has a Net profit of Rs. 25,00,000.

Further as per Section 197of the Companies act,2013 total remuneration payable shall not exceed 11% of the net profit of the company.

What is the defination of inadequate profit with reference to the Schedule V .

Please advice on the above matter, Thanks in advance

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1 Replies

Avneesh Mishra (CS Trainee) (502 Points)
Replied 25 July 2014

Dear Pushkar,

You have not specified your Capital here.

Please also read: Provided that the company in general meeting may, with the approval of the Central Government, authorise the payment of remuneration exceeding eleven per cent. of the net profits of the company, subject to the provisions of Schedule V.

Please refer Section II of Part II of Sch V i.e Remuneration payable by companies having no profit or inadequate profit without Central Government approval.

Another way out is, Seeking CG Approval vide Form No. MR-2 [Rule 7 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014].

Hope your query is addressed.