Remuneration of Board Directors

• Directors' remuneration is the process by which directors of a

company are compensated, with approval from the shareholders
and board of directors.
• Sections 198 and 309 deals with the remuneration of Directors,
of the Companies Act. 
• The total managerial remuneration payable to directors or
managers must not exceed 11% of the net profits of the company.
• But if in any financial year the company has no profits then no
remuneration must be paid to any director or manager without
previous approval of the central govt.
• The payment of remuneration not exceeding Rs. 50,000 in case
of absence or inadequacy of profits.
 Case study
• In Swabey v. Port Darwin Gold Mining Co. Ltd (1899)
• The articles provided that "the directors shall each receive by way of
remuneration out of funds of the company in each year the sum of £200,
and the chairman in addition £100 per annum," A director resigned in the
course of a current year, and the question is whether he was entitled to an
apportioned part of the remuneration for that year.
• The court held that this was a service for hire and reward, a proportionate
part of the remuneration agreed upon should be paid if the service was
determined at an earlier period than the full year."
 Board of Directors of Reliance Jio

Chairman & Managing

Director
 Conclusion
We have identified how the function of the board of directors
and the qualities of the directors on the board need to change
reflect the dynamic relationship between the shareholders and
the board. All companies need dynamic boards of directors in
order to prosper and endure. This is the heart of good
governance. It affects all companies, all the people who work
for them and the communities in which they are based. This
responsibility makes being a director on a board an heavy
position to hold and the planning of the role and composition
of the board of directors a key activity.