Remuneration Payable to Managerial Personnel | Accounting

Remuneration payable to different categories of managerial personnel is as follows:- 1. Manager 2. Managing Director 3. Whole-Time Director 4. Director.

1. Manager:

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Manager means a person who has got the control of the whole or substantially the whole of the affairs of a company. There can be only one manager in a company and such manager cannot be paid more than 5% of the net profits of the company by way of managerial remuneration

2. Managing Director:

Managing director means a director who has substantial powers of management. A company cannot have both a managing director as well as a manager. Of course, it can have more than one managing director. A managing director can be paid by way of managerial remuneration a sum not exceeding 5% of the net profit of the company. In case a company has more than one managing director, the total managerial remuneration payable to all the managing directors will not exceed 10% of the net profit of the company.

3. Whole-Time Director:

A whole-time director is a director who devotes his whole-time attention to the company. A company may have one or more whole-time directors with or without managing director. A whole-time director cannot be paid more than 5% of the net profit of the company by way of managerial remuneration. In case a company has more than one whole-time director, the total remuneration payable to the whole-time directors, including managing directors, if any, should not exceed 10% of the net profit of the company.

4. Director:

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A director is one who directs guides or manages the affairs of a company. According to the Companies Act, the term director includes any person occupying the position of director by whatever name called. Minimum number of directors in case of a private company is two while it is three in case of a public company.

The managerial remuneration payable to all the part-time directors is not to exceed 3% of the net profits of the company if the company does not have a manager or a managing or a whole- time director. In case a company has a manager or a managing director or a whole-time director, the total remuneration payable to directors (part-time) shall not exceed 1% of the net profit of the company. Of course, this does not include the sitting fee payable to these directors.

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