Remuneration to directors of a pvt ltd company

IS THERE ANY LIMIT IF PROFIT IS SUFFICIENT?

Sec. 197 talk about celling limit for director remuneration but sec 197 is not applicalbe to Private Limited Company.

ACCORDING TO SECTION 152 OF THE COMPANIES ACT, A PRIVATE COMPANY CAN HAVE MINIMUM 2 DIRECTORS AND MAXIMUM 15 DIRECTOR. IF COMPANY WANTS TO APPOINT MORE THAN 15 DIRECTORS, THEN COMPANY SHALL PASS SPECIAL RESOLUTION IN THE GENERAL MEETING.

AND FOR REMUNERATION , A PRIVATE COMPANY CAN PAY ANY REMUNERATION TO DIRECTORS BECAUSE AS PER SECTION 197 OF THE COMPANIES ACT , CEILING LIMIT ON REMUNERATION TO DIRECTOR IS 11% OF THE NET PROFIT OF THE COMPANY IN A SINGLE FINANCIAL YEAR WHICH SHALL ONLY BE APPLICABLE TO PUBLIC LIMITED COMPANY

that mean if pvt ltd company earns rs 1 cr as profit then it can pay entire amount to its say 10 directors without any restriction?

divididend distribution not reqired at all?

most private limited company dont go for dividend distribution to avoid DDT

then how do they distribute profit?

Hi everybody,

Mahipal has raised a very important point

"most private limited company dont go for dividend distribution to avoid DDT then how do they distribute profit?"

Does anybody have an answer?

Regards,

Geetha

 

Distribute the profit as director salary if promoters are working as director, as sec 197 not applicable to private limited companies.

Can we pay Director Remuneration in Private Limited company in cash and specify if any limit of cash