Managerial Remuneration

CS SHIVAM SINGHAL E-mail id - csshivamsinghal17@gmail.com ACS, B.COM Contact - 9359135062, 8750993347 1 MANAGERIAL REMUNERATION, ITS APPOINTMENT & COMPANY SECRETARY APPLICABILITY- Section 197 relating to Managerial Remuneration ap plicable only on Public Company. MAXIMUM LIMIT- Total Managerial Remuneration payable to its direc tors including M.D/ W.T.D/ Manager shall not exceed 11% of the net profit (Calculated as per Section 198, refer Annexure) of the Company in any Financial Year. NOTE- The Remuneration of the directors shall not be ded ucted from the aforesaid net profit. Distribution of 11% If company have one M.D/ W.T.D/ Manager If company have Two or more M.D/ W.T.D/ Manager. Other Directors If company have M.D/ W.T.D/ Manager If company have not M.D/ W.T.D/ Manager Not Exceed 5% Not Exceed 10% Not Exceed 1% Not Exceed 3% CS SHIVAM SINGHAL E-mail id - csshivamsinghal17@gmail.com ACS, B.COM Contact - 9359135062, 8750993347 2 NOTE- The aforesaid percentage not include following par ticulars-  Fees Payable to directors for attending Board or co mmittee meeting. (Sitting fees to a director as may be decided by board but shall not e xceed Rs. 1 Lack per board or committee meeting)  Remuneration of services rendered of a professional nature.  Insurance premium paid by Company on behalf of it. (if any director found guilty for any fraud then Insurance premium will be the part o f Limit). NOTE- An Independent director shall not be entitled to a ny stock option but may receive Remuneration by way of sitting fees (not less than such sitting fees payable to other directors of the company), Reimbursement of expenses for part icipation in the Board or Committee meetings and profit related commission as approved by way of Ordinary Resolution in General Meeting. VARIOUS COMBINATION RELATING TO DISTRIBUTION OF 11% Suppose ABC LTD have 6 directors in its Board. 1 st Combination- 1Managing director, 2 Independent directors & 3 ot hers directors Then 1 Managing director shall not get exceed 5% of net profit, 2 Independent directors not entitled to get any percentage, 3 others directors shall not get exceed 1% of net profit. So, total remuneration not exceed 6% of net profit. 2 nd Combination- 2Managing directors, 2 Independent directors & 2 o thers directors Then 2 Managing directors shall not get exceed 10% of net profit, 2 Independent directors not entitled to get any percentage, 2 others directors shall not get exceed 1% of net profit. So, total remuneration not exceed 11% of net profit. 3rd Combination- 2 Independent directors & 4 others directors Then 2 Independent directors not entitled to get an y percentage, 4 others directors shall not get exceed 3% of net profit. So, total remuneration not exceed 3% of net profit. REMUNERATION IN CASE OF NO PROFIT/ INADEQUATE PROFI T Managerial Remuneration not exceed the higher of th e limits under (A) and (B) (A) S.NO. EFFECTIVE CAPITAL LIMIT OF YEARLY REMUNERATIO N 1 Negative or less than 5 crores 30 lakhs 2 5 crores or more but less than 100 crores 42 lakhs 3 100 crores or more but less than 250 crores 60 lakhs CS SHIVAM SINGHAL E-mail id - csshivamsinghal17@gmail.com ACS, B.COM Contact - 9359135062, 8750993347 3 4 250 crores and above 60 lakhs + 0.01% of effective capital in excess of Rs. 250 crores Aforesaid limit will be double after passing Specia l Resolution. Note- Effective Capital means the aggregate of Paid-up Share Capital, rese rves and surplus (excluding revaluation reserves), long term loan & deposits repayable after 1 year, Accumulated losses and preliminary expenses not wri tten off. (B) In the case of Managerial Person- 1. Who was not a Security holder of the Company of nom inal value of Rs. 5 lakh or more. 2. Not related to any director or promoter at any time during two years prior to his appointment as a managerial person