Total Managerial remuneration:
The total remuneration payable to Directors (including all the Whole-time Directors, Managing Directors and, all other Directors) and Managers of a Public company for the Financial Year shall not exceed 11% of net profits of the company for that financial year.
However, the total managerial remuneration payable to directors and managers exceeds 11% of the net profit of the company if:
- The amount of remuneration higher than 11% of net profit is approved by the members in general meeting; and
- Have to follow the conditions and limits provided under Schedule V of the Companies Act.
Remuneration of Whole Time Directors, Managing Directors, and Managers:
The remuneration payable to whole-time directors or a managing director or the manager shall not exceed above the following limits:
- if there is only one of the above-mentioned directors or managers is present then the remuneration shall not exceed 5% of the net profits of that financial year.
- or, If there is more than one of the above-mentioned directors or managers present then the remuneration shall not exceed 10% of the net profits of that financial year.
However, the remuneration can be increased by the limits given above if:
- approval of the members in the general meeting by passing special resolution; and
- if the company has defaulted in payment of dues to any bank or public financial institution or non-convertible or other secured creditors then the approval is taken from such party before passing a special resolution in the general meeting.
Remuneration to other directors:
The remuneration payable to those directors who are not a managing director or a whole-time director shall not exceed the following limit:
- if a company has employed a managing director or a whole-time director or manager then the remuneration shall not exceed 1% of the net profits of that financial year; and
- if if a company has not employed a managing director or a whole-time director or manager then the remuneration shall not exceed 3% of the net profits of that financial year; and
However, the remuneration can be increased by the limits given above if:
- approval of the members in the general meeting by passing special resolution; and
- if the company has defaulted in payment of dues to any bank or public financial institution or non-convertible or other secured creditors then the approval is taken from such party before passing a special resolution in the general meeting.
Remuneration for the companies having no profits(loss) or inadequate profit:
When the companies do not have any profits then they are not allowed to pay any remuneration to its directors except it can pay remuneration to its managerial person( includes whole-time directors, managing directors or managers) according to the limit specified in Schedule V of Companies Act.
| Effective capital Limit | Limit of yearly Remuneration |
| Negative or less than Rs. 5 crores | Rs. 60 lakhs |
| More than Rs. 5 crores but less than Rs. 100 crores | Rs. 84 lakhs |
| More than Rs. 100 crores but less than Rs. 250 crores | Rs. 120 lakhs |
| Rs. 250 crores or more | Rs. 120 lakhs plus 0.01%of the effective capital in excess of Rs. 250 crores |
The remuneration in excess to the limit given above can be paid if a special resolution is passed in the general meeting of the shareholders.
Note: If any managerial person attends the office less than one year the limits shall be applied on the pro-rata basis.
