MANAGERIAL REMUNERATION

INTRODUCTION

Section 197 & Chapter XIII of the Companies Act,2013 deals According to section 197 of the Companies Act 2013 total remuneration to be paid to directors, manager and managing director should not exceed 11% of the net profits. Categories of Managerial Person have been covered like (Managing Director, Whole time Director, Non whole time/part time director & Manager)

APPLICABILITY

The Provisions of Managerial Remuneration shall be applicable only to Listed & Public Companies.

CATEGORIES OF PERSONNEL MAXIMUM PERCENTAGETotal managerial remuneration

Director in whole-time employment

11% of the net profit of the company in that financial year. (maximum ceiling limit) 5% of net profit if there is 1 MD or WTD or 10 % of net profit if more than 1 such directors.

PROVISIONS OF THE ACT

PROVISIONS OF THE ACT

Non Whole time directors 1% of net profit if there is a MD/WTD or Manager or 3% of net profit if no such designation.

CONTINUED..

Any increase in Managerial Remuneration must be through approval by shareholders in GM.

Sitting Fees paid to directors is to outside the limit of 11% of Managerial Remuneration.

Approval for appointed must be made by:

AOA Resolution Special Resolution

CONTINUED..

Extra remuneration can be paid to professionally qualified directors after necessary approval.

No MD/WTD or Manager can be appointed for more than 5 years, reappointment can be made only in fifth year.

Minimum age 21 years & Maximum 70 years (can be increased by SR).

CONTINUED..

Appointment is to be approved by BOD, subsequently by shareholders in GM by SR.

A MD/WTD cannot disown its liability on the ground that its appointment has not been approved by shareholder in GM.

File return in 60 days.

INCREASE IN MANAGERIAL REMUNERATION

For Companies having adequate profit:

Overall payment above 11% require members approval with CG.

No CG approval is required if it is to increased from 5%, 10%, 1% or 3%, however members approval is required.

EFFECTIVE CAPITALLIMIT SHALL NOT EXCEED

(-) or < 5 crore

> 5 crore but < 100 crore

>100 crore but < 250 crore

250 crore & above

30 lakhs

42 lakhs

60 lakhs

60 lakhs +0.01% of capital in excess of 250 crore

COMPANIES HAVING INADEQUATE PROFIT

COMPANIES HAVING INADEQUATE PROFIT

If a Managerial Person was not a shareholder, employee or a director of the company at any time during preceding two years to his appointment shall have

2.5% of the current relevant profit.

PROVISIONS FOR INDEPENDENT DIRECTORS

Different Sitting fees prescribed

Not to receive stock options.

Reimbursement of expenses for participation in BM are allowed.

Profit based commission, subject to shareholders approval in GM.

THANKS