Tag Archives: Managerial Remuneration in case of inadequate profit

Application to Central Government for appointment of Managerial Personnel

[NOTE: The law stated in this post is effective from 12th September 2018. For the law applicable from 1st April 2014 till 11th September 2018, please visit here.]

We discussed the appointment of managing director and whole time directors recently here as per the law effective from 12th September 2018. A careful reading suggests that recent amendment done away with the requirement of the central government for payment of remuneration of managerial personnel. This amendment also eased procedure for appointment of managerial personnel with the limited requirement for central government approval for such an appointment. We will discuss the same, in this post.

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Managerial Remuneration during period of inadequate profit

[NOTE: The law stated in this post is effective from 12th September 2018. For the law applicable from 1st April 2014 till 11th September 2018, please visit here and here.]

Any managerial remuneration exceeding 11% of net profit limit may be payable subject to compliance of conditions given in Schedule V.

Where a remuneration of managerial personal exceed respective limits of 1%, 3% 5%, or 10%  specified in section 197 in any manner, it becomes remuneration in case of the inadequate profit and attracts approval company in general meeting by special resolution, subject to the provisions of Schedule V.

We have discussed Section 197 as amended update 12th September 2018 earlier here. In this post, we will discuss managerial remuneration in case of inadequate profit as per Schedule V as on 12th September 2018.

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Amendment in Schedule V

Ministry of Corporate Affairs, on 12th September 2016 issued notification amending Schedule V of the Companies Act, 2013. Schedule V deals with managerial remuneration in cases of inadequate profit and to some extend managerial appointment in public companies.

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