Schedule XIII

Hai Mam.

This is U.M.Nagaraj.  Firstly I assume that your company would be Public Company for the purpose applicability of Schedule XIII .  Schedule XIII is applicable to only those situation where the Net profit of the company is Nil or  inadequate to meet the remuneration of  MD.  I hereby enclose Effective Capital Calculation for your understanding and also see further attachment for full understanding of Schedule XIII. Because B/sheet is required to calculate effective capital and also C.Govt.' approval depends upon the remuneration that is not mentioned in your query.  Hence It is advisble to see my attachment.      

Thank you for your reply, but I think that I posed my question in a complicated manner. Yes. the Company is a public Company. Sch XIII has 2 sections Section 1 is applicable to Companies having profits.

Thank you for the attached file. But my question is that if the MD is appointed in the middle of 2009, which years figures do I take for calculation the remuneration limit. Whether, March 2009 or estimated profit for March 2010?

 Hi 

Mr. Sangeet, you will have to consider the last audited Balance Sheet for calculating the figures. But however you will have to ensure that the remuneration donot cross the 5% limit of the Current years profit. This you will have to estimate. Calcualtion of profits has to be as per section 349 & 350.  Normally companies pass a comprehensive resolution for paying remuneration and also for minimum remuneration incase profits are inadequate as per Part II of Schedule XIII. You can see Notice of some other listed companies for resolution.  

A note on managerial remuneration is attached for reference. 

Regards

CS Malav Shah

Hi,

Suppose, at the time of approval of the remuneration of the MD in the AGM, no resolution was passed in respect of minimum remuneration to be paid where in any financial year, the company has no profits or the profits are inadequate.

Firstly there is no requirement to pass a seperate Board/Shareholder resolution for payment of minimum remuneration to the Managing Director, the minimum payment can be authorised with the same resolution appointing the Managerial Personnel but the Company can pay that only after satisfying the conditions of Section II of Part II of Schedule XIII of the Companies Act which require approval of remuneration by Remuneration Commiittee.

Further if the Company has already paid the remuneration to the Managerial Personnel in excess of the specified limit then the Managerial Personnel has to return the excess amount or the Company can waive the recovery with the approval of Central Government.

Yes the Company need the approval of Remuneration Committee and also the Board resolution revising payment.

And at last this all has to be done before the Audit of Accounts otherwise your Auditor can put a remark in its report..

 Thanks Mr. Manav for the information. Also the note is very useful.

Pl. clarify my doubt

In a private company, one director is getting remuneration Rs.80000 p.m. At the same time the same person is appointed as MD in a company outside india. That is,  fund is going out of indian company for the director who is available outside india. pl give the reply in all aspect.

Pl. clarify  further is  whole time director not applicable to private company ?  is there any restriction in companies act for his remuneration. (consider that company being closely held company, members objection will not arise & Articles has given power to board to fix  the remuneration)

Friends

A company has -ve effective capital and is running in losses. Can it pay to MD. IF yes whass the limit

Regards

Hi,  I need a minutes of remuneration committee urgenly, can any body have the format for the same.