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Can a Pvt. Ltd. Company and Unlisted Closely held Public Limited Company pay remuneration to its Ordinary Director(other than M.D/WTD) on Monthly, Quartly or yearly basis apart from 1% or 3% of Net Profit as provided under Section 197 of The Companies Act, 2013????

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

Posted By: Vasant patel 9 year(s) ago

This question has been closed if you want to answer,you have to re-open.


    Sundar kambam

In addition to Mr. Vasant patel's observation, I would also like to add that , As per 197(2), the percentages of 1% or 3% is exclusive of any fees payable to Directors under 197(5). Under 197(4) there is a proviso that if the services are of professional nature etc, then the Director is eligible for further remuneration apart from 1% or 3% as specified in 197(3). Under 197(5), Director is entitled to a maximum of Rs. 1 lacs for attending meetings of Board or any other committee.It is also mentioned in 197(5) that the Director is entitled to receive fees for any other purpose whatsoever as determined by the Board.....Maybe through this loophole Company can bypass the 1% or 3% limits...

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Expert    Ankit Singhi

1. Private Company can pay remuneration to director (other than M.D/WTD) without any limit 2. Public company can pay remuneration to the director (other than M.D/WTD) either by way of monthly payment or at a specified percentage of the net profits of the company or partly by one way or the other way provided the amount of remuneration payable to director shall not exceed 1% or 3 % as the case may be.

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