Section 197 - Overall maximum managerial remuneration and managerial remuneration in case of absence or inadequacy of profits

Managerial remuneration limits govern statutory caps and Schedule V conditions for payments to directors and managers.

The statute prescribes percentage ceilings on total managerial remuneration and separate caps for managing/whole time directors, managers and non executive directors, measured by net profits computed under section 198; shareholder approval under Schedule V is required to exceed limits, and prior secured creditor consent is necessary if the company has defaulted. In years of no or inadequate profits, remuneration (excluding prescribed fees) is payable only under Schedule V. Excess payments must be refunded and held in trust; auditors and boards must disclose compliance and listed companies must report director to median employee remuneration ratios.