• Public limited company listed on bse

Hello sir
I want to know that in a public limited company 
Can directors or promoters give their property on rent to the company ?
How much is the maximum remuneration in form of salary , commissions can promoter directors take from the company in one year ?
Asked 7 years ago in Business Law

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10 Answers

The remuneration payable to the directors of a company, shall be determined, in accordance the provisions given either by the articles of the company, or by a resolution ( special resolution if the articles so require ), passed by the company in general meeting and the remuneration payable to any such director determined as per the said provisions shall be inclusive of the remuneration payable to such director for services rendered by him in any other capacity

2) renummeration payable to MD or whole time director of company cannot exceed 5 % of the net profits of the company, except with the approval of the Central Government in case of one director and 10 % for all such directors. -

3) director can give their property on rent to company

Ajay Sethi
Advocate, Mumbai
95168 Answers
7604 Consultations

5.0 on 5.0

rentals paid by company to its directors on their property should be as per the prevailing market rent

rennumeration payable to directors where there is no profit or inadequacy of profit is

1)where effective capital is negative or less than 5 cr 30 lakhs

2) where effective capital is 5 cr and above but below 100 cr 42 lakhs

3) where effective capital is more than 100 cr but less than 250 cr 60 lakhs

4) where effective capital is more than 250 cr 60 lakhs plus 9.91 per cent of effective capital in exceess of 250 cr

Ajay Sethi
Advocate, Mumbai
95168 Answers
7604 Consultations

5.0 on 5.0

You have to apply to Ministry of corporate affairs for permission

2) company can pay commission for the purpose of business expediency and for improving the working of the company

Ajay Sethi
Advocate, Mumbai
95168 Answers
7604 Consultations

5.0 on 5.0

1) total renummeration payable to directors cannot exceed 10 per cent of profits .

2) in the present case remunneration payable cannot exceed 3 crores

3) you can pay the 2 directors commission but since amount is RS 10 crores better obtain prior permission of central govt

Ajay Sethi
Advocate, Mumbai
95168 Answers
7604 Consultations

5.0 on 5.0

1) if as result of payment of commission the business of company has increased by leaps and bounds then the govt should grant you permission

2) your CA can guide you as to the location of office in delhi / mumbai

Ajay Sethi
Advocate, Mumbai
95168 Answers
7604 Consultations

5.0 on 5.0

The directors or promoters can let out their personal property on rent to the company in individual capacity.

The following duties and liabilities have been imposed on the directors of companies, by the Indian Companies Act of 2013, under its Section 166: ---

A director of a company shall act in accordance with the Articles of Association (AOA) of the company.

A director of the company shall act in good faith, in order to promote the objects of the company, for the benefits of the company as a whole, and in the best interests of the stakeholders of the company.

A director of a company shall exercise his duties with due and reasonable care, skill and diligence and shall exercise independent judgment.

A director of a company shall not involve in a situation in which he may have a direct or indirect interest that conflicts, or possibly may conflict, with the interest of the company.

A director of a company shall not achieve or attempt to achieve any undue gain or advantage either to himself or to his relatives, partners, or associates and if such director is found guilty of making any undue gain, he shall be liable to pay an amount equal to that gain to the company.

A director of a company shall not assign his office and any assignment so made shall be void.

If a director of the company contravenes the provisions of this section such director shall be punishable with fine which shall not be less than one Lakh Rupees but which may extend to five Lac Rupees.

T Kalaiselvan
Advocate, Vellore
85369 Answers
2231 Consultations

5.0 on 5.0

An Independent Director is that member of the board of a company, who does not possess any financial relationship with the company (except the sitting fees), nor can own shares in the company.

the new Indian Companies Act of 2013 is rather efficient, fully accountable, transparent, and maximally beneficial to all stakeholders and related professionals, through this intelligent legislation over duties and responsibilities of directors in Indian companies.

Directors can be jointly and severally liable for the consequences if they act collectively in breach of their responsibilities.

Even in a limited liability company, the director could be held personally liable for losses resulting from some acts or omissions.

• These include illegal acts such as wrongful or fraudulent trading and acts beyond his/her powers or undertaken with insufficient skill and care.

Any grievance against the directors can be referred in the board o directors meeting and the irregularities if any found, may be reported to the registrar of companies.

T Kalaiselvan
Advocate, Vellore
85369 Answers
2231 Consultations

5.0 on 5.0

Then which department in central government do permission is needed

Secondly if any director does sales for the company then is he liable for commission on sales ?

I mean commsion on sale is included in 10 percent of net profit cap or not

The details to handle this situation would have mention in the articles of association and also decided by the board of directors in a meeting

T Kalaiselvan
Advocate, Vellore
85369 Answers
2231 Consultations

5.0 on 5.0

Now if two directors are travelling and selling goods

Can we pay them commission besides salary ?

Commission would be at least 10 crore annually as per company turnover

To pay this commission do we still need permission from corporate affairs or no need ?

We are anyways paying commissions to brokers who are not related to company as it is regularbpractice

This is also a decision taken by the company as per the provisions of the articles of association as well as the decisions taken in accordance with the company's rules and administrative decisions.

T Kalaiselvan
Advocate, Vellore
85369 Answers
2231 Consultations

5.0 on 5.0

Is it easy to get permission from central government ?

How do we approach them and where is their office in delhi or Mumbai ?

The procedures to be followed by the company have been stipulated in the new companies act, you may visit the provisions for obtaining permissions from various authorities on all such issues.

T Kalaiselvan
Advocate, Vellore
85369 Answers
2231 Consultations

5.0 on 5.0

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