Question

Select the correct option given below :

Remuneration paid to the Managing Director shall not exceed ___ of the net profit.

• A. 5 %
• B. 10 %
• C. 11 %
• D. 15%

Answer 1

The correct option is A 5 %

Managerial Persons covered are Managing Director, Whole-time Director, Part time Directors and managers who shall be paid remuneration subject to and in accordance with provisions of Section 197 of the Companies Act, 2013. As compared to various sections and chapters viz section 198, 309, etc of Companies Act, 1956 which deals with Managerial remunerations separately, the new Act has solved this issue by consolidating all provisions under a single provision of 197. According to Companies Act, 2013 remuneration paid to the managing director shall not be exceed 5% of the net profit.