Ms. Jyoti is the Managing Director of Wise (India) Ltd., incorporated under the Companies Act, 2013. Board of directors of the company presents the following financial data extracted from the company's financial statemen
CS Executive · Company Law · PYQS · December 2015
Ms. Jyoti is the Managing Director of Wise (India) Ltd., incorporated under the Companies Act, 2013. Board of directors of the company presents the following financial data extracted from the company's financial statements as at 31st March, 2015: Particulars (in crore) Authorised equity share capital ₹60, Paid-up equity share capital ₹10, Debenture redemption reserve ₹10, Securities premium account ₹20, Profit and loss (loss) (₹10), Revaluation reserve ₹20. Due to losses in the financial year 2014-15, the company is not in a position to pay any remuneration to Ms. Jyoti, Managing Director of the company. As per the agreement of service between Ms. Jyoti and the company, in case of losses or inadequacy of profits in any financial year, she is to be paid remuneration on the basis of 'effective capital' of the company. Based on the provisions of the Companies Act, 2013, decide the maximum remuneration payable to Ms. Jyoti for the financial year 2014-15 without the approval of the Central Government.
Answer & Explanation:
As per Schedule V, Section II of the Companies Act, 2013, in case of inadequate profits in the company, the company may without Central Government approval, pay remuneration to the managerial person not exceeding the higher limits on the basis of effective capital i.e. (1) (2) Where the effective capital is Limit of yearly remuneration payable shall not exceed (Rupees) (i) Negative or less than 5 crores 30 lakhs (ii) 5 crores and above but less than 100 crores 42 lakhs (iii) 100 crores and above but less than 250 crores 60 lakhs (iv) 250 crores and above 60 lakhs plus 0.01% of the effective capital in excess of ₹250 crores Therefore, accordingly, maximum yearly remuneration that can be paid to Ms. Jyoti, Managing Director of Wise (India) Ltd. is ₹42 lakhs without permission of the Central Government. However, by passing Special Resolution her remuneration can be double i.e. ₹84 lakhs.
Topics: Company Law
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