INTRODUCTION  Section 197 & Chapter XIII of the Companies Act,2013 deals  According to section 197 of the Companies Act 2013 total remuneration to be paid to directors, manager and managing director should not exceed 11% of the net profits.  Categories of Managerial Person have been covered like (Managing Director, Whole time Director, Non whole time/part time director & Manager)

APPLICABILITY The Provisions of Managerial Remuneration shall be applicable only to Listed & Public Companies.

CATEGORIES OF PERSONNEL MAXIMUM PERCENTAGE MAXIMUM PERCENTAGE Total managerial remuneration Director in whole-time employment 11% of the net profit of the company in that financial year. (maximum ceiling limit) 5% of net profit if there is 1 MD or WTD or 10 % of net profit if more than 1 such directors. PROVISIONS OF THE ACT

Non Whole time directors 1% of net profit if there is a MD/WTD or Manager or 3% of net profit if no such designation.

CONTINUED..  Any increase in Managerial Remuneration must be through approval by shareholders in GM.  Sitting Fees paid to directors is to outside the limit of 11% of Managerial Remuneration.  Approval for appointed must be made by:  AOA  Resolution  Special Resolution

CONTINUED..  Extra remuneration can be paid to professionally qualified directors after necessary approval.  No MD/WTD or Manager can be appointed for more than 5 years, reappointment can be made only in fifth year.  Minimum age 21 years & Maximum 70 years (can be increased by SR).

CONTINUED..  Appointment is to be approved by BOD, subsequently by shareholders in GM by SR.  A MD/WTD cannot disown its liability on the ground that its appointment has not been approved by shareholder in GM.  File return in 60 days.

INCREASE IN MANAGERIAL REMUNERATION  For Companies having adequate profit: Overall payment above 11% require members approval with CG. No CG approval is required if it is to increased from 5%, 10%, 1% or 3%, however members approval is required.

EFFECTIVE CAPITAL LIMIT SHALL NOT EXCEED (-) or < 5 crore > 5 crore but < 100 crore >100 crore but < 250 crore 250 crore & above 30 lakhs 42 lakhs 60 lakhs 60 lakhs +0.01% of capital in excess of 250 crore COMPANIES HAVING INADEQUATE PROFIT

 If a Managerial Person was not a shareholder, employee or a director of the company at any time during preceding two years to his appointment shall have 2.5% of the current relevant profit.

PROVISIONS FOR INDEPENDENT DIRECTORS  Different Sitting fees prescribed  Not to receive stock options.  Reimbursement of expenses for participation in BM are allowed.  Profit based commission, subject to shareholders approval in GM.