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A private ltd.co,which currently has 2 non-resident directors ( no salary drawn), proposes to appoint an existing employee drawing salary from te co. as the third director. Will Secs 196,197 & Sch V be applicable to payment of salary of such director and are there any limits to salary that can be paid, in case the company is a loss making co. Would a Board resolution be sufficient to make the appointment or would a general body resolution also be required. Please advise

Section 197- Overall maximum managerial remuneration and managerial remuneration in case of absence or inadequacy of profits.

Posted By: Radha 9 year(s) ago

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Expert Ankit Singhi

Yes, provision of section 196, 197 and schedule VII are also applicable to Private Company Private company can give remuneration to director in case of profit without any limit but in case of loss, company can give remuneration subject to the limits prescribed in schedule V of the Act. Company need to pass shareholders resolution for appointment.

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