Business Ethics and Corporate Governance, Second Edition

DIRECTORS’ REMUNERATION IN INDIA

Section 198 of the Companies Act 1956 deals with over all maximum managerial remuneration, and managerial remuneration in case of absence or inadequacy of profits. According to this Section:

1. The total managerial remuneration payable by a public limited company or a private company which is a subsidiary of a public company, to its directors and its managers in respect of any financial year shall not exceed 11 per cent of the profits of that company for that financial year, except that the remuneration of the directors shall not be deducted from the gross profits.
2. The 11 per cent shall be exclusive of any fees payable to directors.
3. With the limits of the maximum remuneration specifed in sub-section (1), a company ...