Section 198 & Section 309

Section 198 specifies the overall limit on managerial remuneration (includes payment to MD/WTD/Manager  and part time directors)  which is 11% of the nets profits.

However the limit specified in Section 309 is in respect of payment to WTD/MD which is 10%. The 10% limit does not include payment to non-executive directors. It separately provides for payment of remuneration to directors who are neither in the whole time employment of the company nor a MD.  The limit of remuneration for non-executive directors is 1% of net profits where the company has MD/WTD and 3% where the company does not have MD/WTD.

 CG approval would be required in the following cases -

i) any payment exceeding 10% to MD/WTD

2) any payment exceeding 1% or 3% (as the case may be) in case of non-executive directors

3) appointment of MD / WTD not in accordance with  Schedule XIII

4) in case of non-profit making companies payment of remuneration in excess of the limits specified in Schedule XIII in case of listed companies.

So out of 11%, if 10% payment is made to MD / WTD and 1% is made to part time directors no need for CG approval.

However if the entire 11% is paid to MD / WTD then the approval of CG would be required.

Thanks a lot ma'am

Mam, Can Non Profit making company give remuneration more than 11% of profit by following Shedule XIII ?

What is not adequate profit after remuneration or before ?

If already excess remuneration given what is remedy for that?

And what about other non executive director can they get any remuneration?