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Managerial Remuneration is the remuneration payable to Managerial Personnel ie. Director or Managing Director. Remuneration means any money or cash equivalent paid or payable to any person for services rendered by him/her and which includes the perquisites under the Income-tax Act, 1961. Compnay law is scilent about payment of remuneration to managerial personnel ie. Directors or Managing Director of a Private Limited Companies. The only restriction is there for Public Limited Companies in paying the remuneration to Director or Managing Director. A director or manager may be paid remuneration either by way of a monthly payment or at a specified percentage of the net profits of the company or partly by one way and partly by the other.

Therefore, a private limited company can pay any reuneration to it's director or managing director..

The payment of remuneration to direcror or a managing director is calculated in two situtations:

• When the Company has Profits.

• When the Company does not have Profits or has inadequate profits.

When the Company has Profits:

The total managerial remuneration payable by a public company, to its directors, including managing director and whole-time director, and its manager in respect of any financial year shall not exceed eleven per cent of the net profits of that company for that financial year. Provided that the company in general meeting may, with the approval of the Central Government, authorise the payment of remuneration exceeding eleven per cent of the net profits of the company.

By passing a special resolution in a general meeting, the following remuneration will be paid to managerials personnel:

Condition	Maximum Remuneration
When the company has one managing director/whole time director/manager	5% of the net profits
When the company has more than managing director/whole time director/manager	10% of the net profits to all
Any directors who are neither managing director or whole-time directors	1% of the net profits of the company if there is a managing director/whole time director/Manager
Any directors who are neither managing director or whole-time directors	3% of the net profits of the company if there is no managing director/whole time director/Manager

When the Company does not have Profits or has inadequate profits:

Where in any financial year during the currency of tenure of a director or managing director, a company has no profits or its profits are inadequate, it may pay remuneration to the managing director or director not exceeding the limits given below:

Where the effective capital (in rupees) is	Limit of yearly remuneration payable shall not exceed (in Rupess) in case of a managerial person	Limit of yearly remuneration payable shall not exceed (in rupees) in case of other director
Negative or less than 5 crores.	60 lakhs	12 lakhs
5 crores and above but less than 100 crores.	84 lakhs	17 lakhs
100 crores and above but less than 250 crores.	120 lakhs	24 lakhs
250 crores and above.	120 lakhs plus 0.01% of the effective capital in excess of Rs.250 crores:	24 Lakhs plus 0.01% of the effective capital in excess of Rs.250 crores.

Notes:

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