CA Inter P1 · Chapter 9 · Question 6 of 10
Case: Charu Steels Ltd, a public company, has no managing director but has two whole-time directors. Its net profit computed under section 198 of the Companies Act, 2013 is ₹3,00,00,000. Without approval of the company in general meeting for a higher amount, the maximum aggregate remuneration payable to both whole-time directors together is:
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: D) ₹30,00,000
Explanation
Section 197 limits remuneration to a managing director, whole-time director or manager to 5% of net profits where there is one such director, and 10% for all of them together where there is more than one. With two whole-time directors, the limit is 10% x 3,00,00,000 = ₹30,00,000. The 11% figure is the overall ceiling for all directors and the manager, and 1% relates to non-executive directors where there is an MD or WTD.
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