What is ‘Remuneration?’
‘Remuneration’ means any money or its equivalent given to any person for
services rendered by him and includes the perquisites mentioned in the
Income-tax Act, 1961.
Managerial remuneration in simple words is the remuneration paid to
managerial personals. Here, managerial personals mean directors including
managing director and whole-time director, and manager.
What is the
permissible managerial remuneration payable under the Companies Act 2013?
- Total
managerial remuneration payable by a public company, to its directors,
managing director and whole-time director and its manager in respect of
any financial year:
|
Condition |
Max Remuneration in any
financial year |
|
Company with one Managing
director/whole time director/manager |
5% of the net profits of the
company |
|
Company with more than one
Managing director/whole time director/manager |
10% of the net profits of the
company |
|
Overall Limit on Managerial
Remuneration |
11% of the net profits of the
company |
|
Remuneration payable to
directors who are neither managing directors nor whole-time directors |
|
|
For directors who are neither
managing director or whole-time directors |
1% of the net profits of the
company if there is a managing director/whole time director |
|
If there is a director who is
neither a Managing director/whole time director |
3% of the net profits of the
company if there is no managing director/whole time director |
The percentages displayed above doen not include any sitting fee.
- All percentage will be calculated out of NET PROFIT. Remuneration in excess of
the aforementioned limits may be paid only if a special resolution is
passed by the shareholders.
- When
the company has inadequate profits/no profits: In case a company has
inadequate profits/no profits in any financial year, no amount shall be
payable by way of remuneration except if these provisions are followed.
|
Where the effective capital is: |
Limits of yearly remuneration |
|
Negative or less than 5 Crores |
60 Lakhs |
|
5 crores and above but less
than 100 Crores |
84 Lakhs |
|
100 Crores and above but less
than 250 Crores |
120 Lakhs |
|
250 Crores and above |
120 Lakhs plus 0.01% of the
effective capital in excess of 250 Crores |
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