managerial remuneration .. corporate accounting for bcom 2nd year students. :) accounting and finance

4. Section 2(24) of the Companies Act 1956,
defines the term manager , means an individual
who, subject to superintendence, control and
direction of board of directors, has the
management of the whole, of the affairs of the
company, and includes a director or any other
person occupying the position of a manager by
whatever name called, and whether under a
contract of service or not.

5. Company Act has imposed certain
restrictions on payment of remuneration to
the managerial personnel. Managerial
personnel include directors, managing
directors & managers.
Maximum remuneration to all these persons
is 11% of current year’s profits but this 11%
does not include fees paid to the directors for
attending board meeting.

6. But if profits are NIL or inadequate then
remuneration is based on the amount of
effective capital of the company. It can be
75000 per month to 2,00,000 per month
depending upon the effective capital of the
company.

7. Where the effective capital of
Company is
Remuneration per month
Less than rupees 1crore Rs. 75,000
Between 1,00,00,000 and 5,00,00,000 Rs. 1,00,000
Between 5 crore – 25 crore Rs. 1,25,000
Between 25 crore – 50 crore Rs. 1,50,000
Between 50 crore – 100 crore Rs. 1,75,000
Between 100 crore or more Rs. 2,00,000

8. Any rent free accomdation provided to them .
Any another benefit free of cost or at
concessional rate.
Any expense incurred on taking for
insurance policy of managerial personnel or
a spouse or children

9. Contribution to his provident fund & pension
fund.
Gratuity payable
Leave encashment.

10. Section 349 of the Companies Act lays down
how the net profits of the company will be
ascertained for the purpose of the
managerial remuneration.

11. Subsidy & bounties
Business incomes
Profit on sale of asset

12. Non business incomes
Profit on issue of shares
Profit on reissue of forfeited shares
Capital profit on sale of assets
Profit on sale of establishment.