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    Remuneration to Additional Director

    Posted By : Sachin / Published on : 04-Feb-2022 01:48 PM / View : 155 / Comment : 1
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    Hello all,

    Can company pay remuneration to additional director appointed in the executive category?

    Thanks in advance.
    Read more on : director additional remuneration

    • Hello Sir

      As per section 197 of the Companies Act 2013

      (1) The total managerial remuneration payable by a public company, to its Directors, including managing director and whole-time director, and its manager in respect of any financial year shall not exceed eleven per cent. of the net profits of that company for that financial year computed in the manner laid down in section 198 except that the remuneration of the Directors shall not be deducted from the gross profits:

      Provided that the company in general meeting may, authorise the payment of remuneration exceeding eleven per cent. of the net profits of the company, subject to the provisions of Schedule V:

      Provided further that, except with the approval of the company in general meeting,[By a special resolution],—

      (i) the remuneration payable to any one managing director; or whole-time director or manager shall not exceed five per cent. of the net profits of the company and if there is more than one such director remuneration shall not exceed ten per cent. of the net profits to all such Directors and manager taken together;

      (ii) the remuneration payable to Directors who are neither managing Directors nor whole-time Directors shall not exceed,—

      (A) one per cent. of the net profits of the company, if there is a managing or whole-time director or manager;

      (B) three per cent. of the net profits in any other case.

      This section is specifically for the public companies and there is no particular section for the private companies. This implies that private companies can pay remuneration to the direcors in any such manner as they deem fit.

      Therefore, the provisions related to remuneration to additional directors are different for private and public companies. There is no such restriction to pay remuneration to additional directors in the executive category.

      Hence, a company can pay remuneration to additional director in the executive category.

      Thanking you!  

       

      20-04-2022 / 05:54:14 AM
      Reply



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