Legal requirements

Legal requirements to be complied with by a public company
to give effect to the following proposals:
(i)Payment of Rs. 50,000 as minimum remuneration to the ordinary directors in
a financial year when the company has suffered a loss. The directors have
been receiving remuneration by way of cmmission on net profits’within the
prescribed limits.
(ii)Payment of minimum remuneration to a whole-time director in a financial year
when the company has suffered a loss. The appointment has been made in
accordance with the conditions specified in Schedule XIII to the Companies
Act and he is being remunerated by way of commission on net profits.
(iii)Appointment of a person as Managing Director without remuneration in
accordance with the conditions specified in Schedule XIII to the Companies
Act, when he is already holding position of Managing Director in a Private
Company. [C.A. (Final) May, 1995]
lemuneration by way of commission can be paid to an ordinary director only
with the sanction of a special resollllion .Fresh special resolution is required t be passed afterevery five years
The concept of minimum remuneration, however, has no relevance with
reference to ordinary””airectors.
Depending upon the effective capital of the company, a wholetime director can be paid @Rs. 75,000 p.m. to Rs. 2,00,000 p.m. as per Schedule XIII (w.e.f. .
2. 3. 2000). It is immaterial as to whether the ?mount is paid by way of salary ., or commISSIon.
Section 31d along with Schedule XIII, provides that no public compapy and no private company which is a subsidiary of a public company shall
appoint or employ any person as managing director, it he is either the
managing director or the manager of any other company including a private
company which is not a subsidiary of a public company except by passing a
resolution at a meeting of the Board with the consent of all the directors
present at the meeting and of which meeting, and of the resolutions to be
moved thereat, specific notice had been given to all the directors then in India.