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Maximum managerial remuneration permissible under the Companies Act, 1956 for public limited companies is.
- a)10% of the net profits
- b)5% of net profit
- c)11% of net profit
- d)8% of net profit
Correct answer is option 'C'. Can you explain this answer?
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Maximum managerial remuneration permissible under the Companies Act,19...
The maximum managerial remuneration permissible under the Companies Act, 1956 for public limited companies is 11% of the net profit.
Explanation:
Under the Companies Act, 1956, the maximum managerial remuneration that can be paid to directors or managing directors of public limited companies is subject to certain restrictions and regulations. The Act specifies that the total managerial remuneration should not exceed a certain percentage of the net profit of the company.
Here are the key points to understand about the maximum managerial remuneration permissible under the Companies Act, 1956:
1. Legal Framework: The Companies Act, 1956 governs the rules and regulations related to companies in India. It sets out provisions for various aspects of company management, including the remuneration of directors.
2. Maximum Limit: The Act imposes a limit on the total remuneration that can be paid to directors or managing directors of public limited companies. The maximum limit is set at 11% of the net profit of the company.
3. Net Profit Calculation: The net profit is calculated by deducting all expenses, including taxes, interest, depreciation, and provisions, from the total revenue generated by the company during a specified period.
4. Components of Remuneration: The managerial remuneration includes various components such as salary, allowances, perquisites, and commission, if any. The total remuneration paid to the directors should not exceed the maximum limit of 11% of the net profit.
5. Compliance Requirement: Companies are required to comply with the provisions of the Companies Act, 1956 regarding managerial remuneration. Failure to comply with the prescribed limits can lead to penalties and legal consequences.
In conclusion, the maximum managerial remuneration permissible under the Companies Act, 1956 for public limited companies is 11% of the net profit. Public limited companies should ensure that they comply with these provisions while determining and paying remuneration to their directors or managing directors.
Explanation:
Under the Companies Act, 1956, the maximum managerial remuneration that can be paid to directors or managing directors of public limited companies is subject to certain restrictions and regulations. The Act specifies that the total managerial remuneration should not exceed a certain percentage of the net profit of the company.
Here are the key points to understand about the maximum managerial remuneration permissible under the Companies Act, 1956:
1. Legal Framework: The Companies Act, 1956 governs the rules and regulations related to companies in India. It sets out provisions for various aspects of company management, including the remuneration of directors.
2. Maximum Limit: The Act imposes a limit on the total remuneration that can be paid to directors or managing directors of public limited companies. The maximum limit is set at 11% of the net profit of the company.
3. Net Profit Calculation: The net profit is calculated by deducting all expenses, including taxes, interest, depreciation, and provisions, from the total revenue generated by the company during a specified period.
4. Components of Remuneration: The managerial remuneration includes various components such as salary, allowances, perquisites, and commission, if any. The total remuneration paid to the directors should not exceed the maximum limit of 11% of the net profit.
5. Compliance Requirement: Companies are required to comply with the provisions of the Companies Act, 1956 regarding managerial remuneration. Failure to comply with the prescribed limits can lead to penalties and legal consequences.
In conclusion, the maximum managerial remuneration permissible under the Companies Act, 1956 for public limited companies is 11% of the net profit. Public limited companies should ensure that they comply with these provisions while determining and paying remuneration to their directors or managing directors.
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Maximum managerial remuneration permissible under the Companies Act,1956 for public limited companies is.a)10% of the net profitsb)5% of net profitc)11% of net profitd)8% of net profitCorrect answer is option 'C'. Can you explain this answer?
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