X Ltd. was incorporated on 1st July, 2016. Shiva was appointed as managing director on 25th October, 2018. Company suffered a loss of ₹3,00,000 in accounting year 2018-19. As per Part-II of Schedule V of the Companies Ac

CS Executive · Company Accounts & Auditing Practices · PYQS · December 2020
X Ltd. was incorporated on 1st July, 2016. Shiva was appointed as managing director on 25th October, 2018. Company suffered a loss of ₹3,00,000 in accounting year 2018-19. As per Part-II of Schedule V of the Companies Act, 2013, state that the maximum remuneration for the year 2018-19 to Shiva as managing director by considering the following information of Company's effective capital: (i) On 25th October, 2018 — ₹70 crore. (ii) On 31st March, 2019 — ₹110 crore. (iii) On 31st March, 2018 — ₹90 crore.

Answer & Explanation:

For Calculation of managerial remuneration in case of inadequate profit or no profit, effective capital of the company will be taken as on last day of the year preceding to the date of appointment as managing director. In this case it is ₹90 Crore. If effective capital is ₹5 Crore and above but less than ₹100 crore, than remunerations payable shall be not exceed ₹42 Lakh per annum. Therefore maximum remuneration of Mr. Shiva for the year 2018-19 will be ₹4200000 per annum or ₹350000 per month.

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