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Remunaration to director

YOGESH (assi. company secretary) (477 Points)

26 June 2013

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

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4 Replies

Sarvesh (Company Secretary) (179 Points)
Replied 27 June 2013

As per the provisions section 309(3) remuneration paid to any single director cannot exceed the limit of 5% w/o CG approval. So i don't think that it was a gud idea to pay in the ratio of 8:2. However the Co. can pay in the ratio of 5:5 since the limit of remuneration to be paid to single director was also considered or kept in mind.

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YOGESH (assi. company secretary) (477 Points)
Replied 27 June 2013

sarvesh sir, thanks for your valuable reply, but

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

Sarvesh (Company Secretary) (179 Points)
Replied 29 June 2013

Dear Yogesh,

I agree with your above observation that in second case, limit for payment of maximum remuneration to a single director has not been specified. But in view of fair corporate practice i think that the limit of 5% shall also be considered in second case. However you can go as per your understanding.