Lakshman has been appointed as the managing director of Lucky Limited (which does not have any other whole time directors) on the following terms and conditions: (i) Remuneration amounting to 5% of the net profits of the

The overall limit on managerial remuneration indicated in section 197 of the Companies Act, 2013 read with Schedule V of the Act has the following further conditions: a. The remuneration shall not include any fee for services rendered by such director in other capacity if the services are of professional nature and in the opinion of the Nomination and Remuneration committee or the Board of Directors, as the case may be, the director possesses the prescribed qualification for the practice of the profession. b. Premium paid on insurance taken to indemnify the directors against any liability arising out of their negligence, default etc. is not included in the overall remuneration, provided the concerned director is not guilty. c. Sitting fee for attending the meeting of the Board or a committee thereof, is not included in the overall remuneration. Considering the above provisions, the fee payable for actuarial services is to be added to Lakshman's remuneration as he does not possess professional qualification to practice actuarial science. In that case, the overall remuneration exceeds the limit of 5% of net profits as provided in the section. Therefore, the company has to get the approval of the shareholders by way of a special resolution in terms of Section 197. As the company has defaulted in payment of interest and principal on term loans to the banks, the company should also take a prior approval of the banks for paying the above remuneration to Lakshman, before passing the special resolution by shareholders.