Private Companies can pay Managerial Remuneration without any ceiling

By | August 19, 2015

Q: whether Private Companies can pay Managerial Remuneration without any ceiling as Section 197 of the Companies Act 2013 is silent regarding the same.

Answer: Yes, any amount can be paid to the MD/WTD without central government approval pursuant to the exemption notification and/or subject to compliance with the conditions prescribed therein pursuant to the provisions of Rule 7(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014.

However payment of sitting fees to any part-time directors by a private company having inadequate profits would require the central government’s approval pursuant to Section-197(3) since part-time directors are not covered by Section-196(4) which is exempted for private companies.

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