What is the maximum limit of managerial compensation as per Companies Act?

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"We have a curious question on managerial salaries. What is the maximum limit of managerial remuneration as per Companies Act? "

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Answer-

Hello!

  • Company can pay not more than 11% of the net profit as calculated in a manner laid down in section 198 of the companies act. It is applicable to the Managing Director (MD) or Whole-Time Directors (WTD).
  • A company having only one Managing Director, Whole-Time Director or Manager shall not pay more than 5% of its net profits.
  • A company has more than one such Directors, remuneration shall be payable not more than 11% of the net profit.

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  • A company has more than one such Directors, remuneration shall be payable not more than 11% of the net profit.
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