Question ID : 44585

Managerial Remuneration under Sec.197

A company pays remuneration to its past directors towards service they rendered when they were directors. Should this amount be considered in overall managerial remuneration limit under sec.198 read with sec.197 for current year?

Section 197 of the Companies Act, 2013 prescribed the maximum ceiling for payment of managerial remuneration by a public company to its managing director whole-time director and manager which shall not exceed 11% of the net profit of the company in that financial year computed in accordance with section 198 except that the remuneration of the directors shall not be deducted from the gross profits.