There is a public limited company (paid up capital Rs. 25 crore) in which 10 directors are there. Out of which one is Managing Director and one is Chairman. Now we want to give remuneration of Rs. 5.00 Lacs per month each to both MD and Chairman which we can comfortably give as per schedule XIII. To other 8 directors all are paid salary in the range of Rs. 50000 to 100000 per month.
In short all our 10 directors are paid Directors remuneration. Company is planning to get listed with stock exchange.
Now my queries are :
1. What will be the constitution of remuneration committee. I do not have any independent director in the company. Can a director who is paid remuneration be appointed as independent director.
2. Is constitution of Selection committee necessary / mandatory? If so, under which section or provision?
3. Can MD or chairman (in my case they are paid salary of Rs. 5.00 Lacs p.m.) be designated as non executive director? Can a director who is paid salary be treated as non executive director?
4. How much remuneration I can pay to all the directors under the companies act provisions section 198, 349, 350.
5. For paying remuneration for the year 2011-2012 we have to consider 11% of net profits of 2010-2011 or 2011-2012.
6. Can chairman of company who is paid Rs. 5.00 lacs per month as salary be designated as Non Executive Director? What is the basis difference between executive and non executive director, it is not mentioned in Companies Act anywhere. What is the criterion to demarcate between the two (as u mentioned remuneration is not the criterion)
7. Outside expert which should be there in selection committee (under Director’s Relative office or place of profit Rules) can be MBA or CA who is employee of that public company or he should be consultant of company not on rolls?
8. For the year 2011-2012 5%, 10% and 1% ceiling of net profit will be calculated from 2010-11 ? where it is mentioned ?
Pls elaborate and clarify.
I convey my thanks in advance.
CAclubindia
