law: Companies Act, 2013 
  197.
  
    Overall
  
  maximum managerial remuneration and managerial remuneration in case of absence
  
  or inadequacy of profits.
  1.      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 computed in the manner laid down in section 198 except that
  
  the remuneration of the directors shall not be deducted from the gross profits:
  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, subject to the provisions of Schedule V:
  Provided
  
  further that, except with the approval of the company in general meeting,—
               
  
   i.        
  
    the
  
  remuneration payable to any one managing director; or whole-time director or
  
  manager shall not exceed five per cent. of the net profits of the company and
  
  if there is more than one such director remuneration shall not exceed ten per
  
  cent. of the net profits to all such directors and manager taken together;
              
  
   ii.        
  
    the
  
  remuneration payable to directors who are neither managing directors nor
  
  whole-time directors shall not exceed,—
  A.    
  
    one
  
  per cent. of the net profits of the company, if there is a managing or
  
  whole-time director or manager;
  B.    
  
    three
  
  per cent. of the net profits in any other case.
  1.     
  2.      The percentages
  
  aforesaid shall be exclusive of any fees payable to directors under sub-section
  
  (5 ).
  3.      Notwithstanding
  
  anything contained in sub-sections (1 ) and (2 ), but subject to
  
  the provisions of Schedule V, if, in any financial year, a company has no
  
  profits or its profits are inadequate, the company shall not pay to its
  
  directors, including any managing or whole time director or manager, by way of
  
  remuneration any sum exclusive of any fees payable to directors under
  
  sub-section (5 ) hereunder except in accordance with the provisions of
  
  Schedule V and if it is not able to comply with such provisions, with the
  
  previous approval of the Central Government.
  4.      The remuneration
  
  payable to the directors of a company, including any managing or whole-time
  
  director or manager, shall be determined, in accordance with and subject to the
  
  provisions of this section, either by the articles of the company, or by a
  
  resolution or, if the articles so require, by a special resolution, passed by
  
  the company in general meeting and the remuneration payable to a director
  
  determined aforesaid shall be inclusive of the remuneration payable to him for
  
  the services rendered by him in any other capacity:
  Provided
  
  that any remuneration for services rendered by any such director in other
  
  capacity shall not be so included if—
  a.     
  
    the
  
  services rendered are of a professional nature; and
  b.    
  
    in
  
  the opinion of the Nomination and Remuneration Committee, if the company is
  
  covered under sub-section (1 ) of section 178, or the Board of Directors
  
  in other cases, the director possesses the requisite qualification for the
  
  practice of the profession.
  1.     
  2.     
  3.     
  4.     
  5.      A director may
  
  receive remuneration by way of fee for attending meetings of the Board or
  
  Committee thereof or for any other purpose whatsoever as may be decided by the
  
  Board:
  Provided
  
  that the amount of such fees shall not exceed the amount as may be prescribed:
  Provided
  
  further that different fees for different classes of companies and fees in
  
  respect of independent director may be such as may be prescribed.
  1.     
  2.     
  3.     
  4.     
  5.     
  6.      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.
  7.      Notwithstanding
  
  anything contained in any other provision of this Act but subject to the
  
  provisions of this section, an independent director shall not be entitled to
  
  any stock option and may receive remuneration by way of fees provided under
  
  sub-section (5 ), reimbursement of expenses for participation in the
  
  Board and other meetings and profit related commission as may be approved by
  
  the members.
  8.      The net profits for
  
  the purposes of this section shall be computed in the manner referred to in
  
  section 198.
  9.      If any director draws
  
  or receives, directly or indirectly, by way of remuneration any such sums in
  
  excess of the limit prescribed by this section or without the prior sanction of
  
  the Central Government, where it is required, he shall refund such sums to the
  
  company and until such sum is refunded, hold it in trust for the company.
  10.   The company shall not
  
  waive the recovery of any sum refundable to it under sub-section (9 )
  
  unless permitted by the Central Government.
  11.   In cases where
  
  Schedule V is applicable on grounds of no profits or inadequate profits, any
  
  provision relating to the remuneration of any director which purports to
  
  increase or has the effect of increasing the amount thereof, whether the
  
  provision be contained in the company’s memorandum or articles, or in an
  
  agreement entered into by it, or in any resolution passed by the company in
  
  general meeting or its Board, shall not have any effect unless such increase is
  
  in accordance with the conditions specified in that Schedule and if such
  
  conditions are not being complied, the approval of the Central Government had
  
  been obtained.
  12.   Every listed company
  
  shall disclose in the Board’s report, the ratio of the remuneration of each
  
  director to the median employee’s remuneration and such other details as may be
  
  prescribed.
  13.   Where any insurance
  
  is taken by a company on behalf of its managing director, whole-time director,
  
  manager, Chief Executive Officer, Chief Financial Officer or Company Secretary
  
  for indemnifying any of them against any liability in respect of any
  
  negligence, default, misfeasance, breach of duty or breach of trust for which
  
  they may be guilty in relation to the company, the premium paid on such insurance
  
  shall not be treated as part of the remuneration payable to any such personnel:
  Provided
  
  that if such person is proved to be guilty, the premium paid on such insurance
  
  shall be treated as part of the remuneration.
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  14.   Subject to the provisions
  
  of this section, any director who is in receipt of any commission from the
  
  company and who is a managing or whole-time director of the company shall not
  
  be disqualified from receiving any remuneration or commission from any holding
  
  company or subsidiary company of such company subject to its disclosure by the
  
  company in the Board’s report.
  15.   If any person
  
  contravenes the provisions of this section, he shall be punishable with fine
  
  which shall not be less than one lakh rupees but which may extend to five lakh
  
  rupees.