Public Limited Company and the Managerial Remuneration

Companies Act of 1956 clearly states the managerial remuneration for a public limited company or private limited company should not be more than 11% of the net profits, in any financial year. This remuneration is paid to managers, directors working on full or part time basis in a subsidiary of a public limited company.

The companies act also has a provision to make a minimum payment of wages to managerial personal, in case a company profits nothing from the business run. As per the provision, any company might need not to pay wages for financial year, especially when there no profit at all, to any managing or whole time director, or a manager. They will be paid nothing more than the amount mentioned in the memorandum of articles or approved by the government.

Public or private limited companies have to comply with the government rules for calculating the remuneration of the higher authorities. This is to ensure that no money is paid in excess to any managerial personal.


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