Rohit AgrawalRohit Agrawal asked 4 months ago
1 Answers
RaviRavi Staff answered 4 months ago

Below is text of Sec 197 — all brackets with 34 are changes which were done on 12th Nov 2018, now audit RTP is silent about it, please ask law professors whether changes after 31st October such as this will get applicable, it depends on law RTP, if it covers it, it is applicable and vice-versa
they have removed permission of CG to cross 11%, so to cross 11% only ordinary resolution is required. Further to cross individual limit of MD / WTD / PTD special resolution will be required.
31 Overall maximum managerial remuneration and managerial remuneration in case of absence or inadequacy of profits. 32
33 197. 34(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, 34a[***] 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, 34b[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;

(i)
 
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:

34b [Provided also that, where the company has defaulted in payment of dues to any bank or public financial institution or non-convertible debenture holders or any other secured creditor, the prior approval of the bank or public financial institution concerned or the non-convertible debenture holders or other secured creditor, as the case may be, shall be obtained by the company before obtaining the approval in the general meeting. ]