What is ‘managerial Remuneration’?
Managerial remuneration means remuneration paid to managerial personnel like directors, managing directors, whole-time directors and manager.
Overall Managerial Remuneration payable:
Provided that, company can pass a special resolution in general meeting for payment of managerial remuneration more than 11% of the net profit.
Overall Managerial Remuneration payment criteria:-
|Category||Maximum Permissible Managerial Remuneration|
|Whole-Time Director (One)||5%|
|Managing Director (One)||5%|
|Whole-Time Director (more than one)||10%|
|Managing Director (more than one)||10%|
|Managing Director, Manager with one or more Whole-Time Director||10%|
|Overall Limit for Total Managerial Remuneration to all Managerial Personnel||11%|
|Part Time Director with one or more Whole-Time Director or Managing Directors||1%|
|Part Time Director without Whole-Time Director or Managing Directors||3%|
Further, if a public company defaults in payment of dues to any bank / public financial institution / non-convertible debenture holders / any other secured creditor, such company would be required to obtain prior approval of such bank / public financial institution / non-convertible debenture holders / any other secured creditor, as the case may be, before obtaining the shareholders’ approval.
If, in any financial year, a company has no profits or its profits are inadequate, the company shall not pay remuneration to its directors, including any managing or whole-time director or manager not exceeding, the limits are as under:-
|Where the effective capital is||Limit of yearly remuneration payable shall not exceed (Rupees)|
|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 Rs. 250 crores:|
Above remuneration can be paid in the case of inadequate or no profits, only after obtaining approval of the shareholders by a special resolution.
Any remuneration received by any director / managerial personnel in excess of the statutory limits without obtaining the approval from the shareholders, must be refunded to the company, within two years or such lesser period as may be allowed by the company, and until such sum is not refunded, such director / managerial personnel would continue to hold it in trust for the company. Any waiver of such refund must be approved by the shareholders by a special resolution within two years from the date the sum becomes refundable.
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