CAN NON-EXECUTIVE DIRECTOR DRAW REMUNERATION FROM PRIVATE LIMITED COMPANY AS PER CA2013

[J K]

Hi friends,

Please let me know whether is it allowed to pay REMUNERATION (other than sitting fees) to Non-Executive Director of PRIVATE LIMITED COMPANY as per CA 2013.

??

because if am not wrong then as per CA 2013, Public Company as per Sec. 197(1) (ii) can pay REMUNERATION to Directors who are neither managing nor whole-time Director as per specified %.

BUT as the above stated provisions of remuneration not applicable to Private Limited Company, whether Private Limited Company allowed to pay remuneration without any limit to Non-Executive Director. 

Please give your valuable suggessions......

Thank you

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Regards,

Jatin K

[J K]

[SrikanthReddyKolli CS]

sec 197 speaks about managerial remuneration which applies only to public companies. so for private companies, check articles for authorisation to pay remuneration to NED. as a prudent practice it is not correct to pay remuneration to NED except sitting fee as decided by the board in their meeting not exceeding 1,00,0000 rs. instead of remuneration you can pay commission on net profits without any limit for private companies.

[J K]

thanks a lot for sharing your views.

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Regards,

Jatin K

[J K]

other members kindly express their views.....

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Regards,

Jatin K

[venkatesh dangeti]

in my view, as there is no employer and employee relationship between NED and company, NED should not draw remuneration other than by way of sitting fee ( RCM applies ) and Commission based on profits

[Bala Sri]

Hi Mr. Jatin K,

I have a different view.

My Views in here below :

At  the high level,  Executive / Non-Executive director is not defined in the Act, the ED is defined in Rules and refers to WTD.

a. Non-Executive Directors are eligible for remuneration. Pls refer to 197(4). It is applicable to 'company' and is not specific to public.

 In the case of a public company, the cap is fixed via 197(1).

b. If in the event of a Loss, remuneration cap is guided by 197(3).

To answer your question about 'to pay without limit',, the limit will indirect be capped by 197(3) if the payment results in a loss. Otherwise the private limited company is free to pay any remuneration to NED, subject to restrictions in AOA if any.

Hope this helps.

Rgds

Bala Srini FCA., LL.B.

94498-27834

[CS. JAYANT SUTHAR]

SEE SEC 188(1)(f) too

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Jayant Suthar

M.Com., FCS, ACMA