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`Company must fix managerial remuneration'

Our Bureau

NEW DELHI, July 23

THE Federation of Indian Chambers of Commerce and Industry (FICCI) has suggested that managerial remuneration should not be governed by the provisions of the Company Law.

It should be left to the company to decide how much managerial remuneration that it wishes to give its managerial personnel, with the prior approval of the shareholder, FICCI said.

However, if it is felt that the managerial remuneration should be governed by the Company Law then the existing limit of 11 per cent of net profit is on the lower side and should be increased suitably, more particularly the limit prescribed for the non-e xecutive directors, the chamber said.

Presently, under Section 198 of the Companies Act the total managerial remuneration payable by a public company or a private company which is a subsidy of a public company, to its directors and managers in respect of any financial year shall not exceed 1 1 per cent of the net profits of that company.

In the case of a professional appointee having no interest in shareholding in a new company or a having past losses or not requiring large effective capital like IT companies, FICCI suggested that the Department should be liberal with regard to their qua lification, experience and future prospects of the applicant company.