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Overall maximum managerial remuneration and managerial remuneration in case of absence or inadequacy of profits

Section 197 - Acts - APPOINTMENT AND REMUNERATION OF MANAGERIAL PERSONNEL - Companies Act, 2013 - Section 197 - 197. (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 .....

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ny 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; (ii) 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. 3[Provided also that, where the company has defaulte .....

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anding anything contained in sub-sections (1) and (2), but subject to the provisions of Schedule V, if, in any financial year, a company has no profits or its profits are inadequate, the company shall not pay to its directors, including any managing or whole-time director or manager, by way of remuneration any sum exclusive of any fees payable to directors under sub-section (5) hereunder except in accordance with the provisions of Schedule V 4[***]. (4) The remuneration payable to the directors .....

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at any remuneration for services rendered by any such director in other capacity shall not be so included if- (a) the services rendered are of a professional nature; and (b) in the opinion of the Nomination and Remuneration Committee, if the company is covered under sub-section (1) of section 178, or the Board of Directors in other cases, the director possesses the requisite qualification for the practice of the profession. (5) A director may receive remuneration by way of fee for attending meet .....

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tly by one way and partly by the other. 10[**********] (8) The net profits for the purposes of this section shall be computed in the manner referred to in section 198. 5[(9) If any director draws or receives, directly or indirectly, by way of remuneration any such sums in excess of the limit prescribed by this section or without approval required under this section, he shall refund such sums to the company, within two years or such lesser period as may be allowed by the company, and until such s .....

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ion concerned or the non-convertible debenture holders or other secured creditor, as the case may be, shall be obtained by the company before obtaining approval of such waiver.] (11) In cases where Schedule V is applicable on grounds of no profits or inadequate profits, any provision relating to the remuneration of any director which purports to increase or has the effect of increasing the amount thereof, whether the provision be contained in the company's memorandum or articles, or in an ag .....

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ector, whole-time director, manager, Chief Executive Officer, Chief Financial Officer or Company Secretary for indemnifying any of them against any liability in respect of any negligence, default, misfeasance, breach of duty or breach of trust for which they may be guilty in relation to the company, the premium paid on such insurance shall not be treated as part of the remuneration payable to any such personnel: Provided that if such person is proved to be guilty, the premium paid on such insura .....

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of this section, he shall be liable to a penalty of one lakh rupees and where any default has been made by a company, the company shall be liable to a penalty of five lakh rupees.] 9[(16) The auditor of the company shall, in his report under section 143, make a statement as to whether the remuneration paid by the company to its directors is in accordance with the provisions of this section, whether remuneration paid to any director is in excess of the limit laid down under this section and give .....

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ndment) Act, 2017 Dated 03-01-2018 w.e.f. 12-09-2018 , before it was read as, "with the approval of the Central Government," 2. Inserted vide The Companies (Amendment) Act, 2017 Dated 03-01-2018 w.e.f. 12-09-2018 3. Inserted vide The Companies (Amendment) Act, 2017 Dated 03-01-2018 w.e.f. 12-09-2018 4. Omitted vide The Companies (Amendment) Act, 2017 Dated 03-01-2018 w.e.f. 12-09-2018 , before it was read as, "and if it is not able to comply with such provisions, with the previous .....

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