Chapter XIII - Appointment and Remuneration of Managerial Personnel
Section 200
Section 200: company to fix limit with regard to remuneration
Section 200 applies when a company approves an appointment under section 196 or remuneration under section 197 in a year of inadequate or no profits. The company may fix the remuneration, within the limits specified in the Act, at an amount or percentage of profits it considers fit, having regard to five listed factors.
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This article is for general information. Refer to the Companies Act, 2013 official text for the official provisions. If you need professional advice for your situation, contact Bizeneed.
Statutory text
Bare law
Notwithstanding anything contained in this Chapter, a company may, while according its approval under section 196, to any appointment or to any remuneration under section 197 in respect of cases where the company has inadequate or no profits, fix the remuneration within the limits specified in this Act, at such amount or percentage of profits of the company, as it may deem fit and while fixing the remuneration, the company shall have regard to—(a) the financial position of the company; (b) the remuneration or commission drawn by the individual concerned in any other capacity; (c) the remuneration or commission drawn by him from any other company; (d) professional qualifications and experience of the individual concerned; (e) such other matters as may be prescribed.
Introduction
The factors are the company’s financial position, the person’s remuneration in any other capacity, remuneration from any other company, professional qualifications and experience, and other prescribed matters.
Section 200 commenced on 1 April 2014 under S.O. 902(E). Section 69 of the Companies (Amendment) Act, 2017 omitted the words "the Central Government or" at both places, with effect from 12 September 2018 under S.O. 4823(E). The marginal heading still mentions the Central Government because the amendment did not change it.
Key takeaways
Inadequate or no profits
The section applies when approving appointments or remuneration in such cases.
Within statutory limits
Remuneration must stay within the limits specified in the Act.
Five factors
Financial position, other-capacity pay, pay from other companies, qualifications and experience, and prescribed matters.
Company, not Government
Since 12 September 2018 the section refers only to the company fixing the remuneration.
What the section allows
Notwithstanding anything in Chapter XIII, a company may, while according its approval under section 196 to any appointment, or under section 197 to any remuneration, in cases where it has inadequate or no profits, fix the remuneration within the limits specified in the Act, at such amount or percentage of profits as it may deem fit.
- India Code — consolidated Companies Act, 2013, section 200
- eGazette — Companies (Amendment) Act, 2017 (No. 1 of 2018)
- eGazette — MCA notification S.O. 4823(E), 12 September 2018 (Companies (Amendment) Act, 2017 sections 66 to 70 in force)
- eGazette — MCA notification S.O. 902(E), 26 March 2014 (commencement from 1 April 2014)
Factors to consider
While fixing the remuneration the company must have regard to: (a) its financial position; (b) the remuneration or commission drawn by the individual in any other capacity; (c) the remuneration or commission drawn by him from any other company; (d) the individual’s professional qualifications and experience; and (e) such other matters as may be prescribed.
Amendment history
As enacted, the section referred to "the Central Government or" the company. Section 69 of the Companies (Amendment) Act, 2017 omitted those words at both places, effective 12 September 2018 (S.O. 4823(E)). The limits themselves are found in section 197 and Schedule V, which are outside this guide.
Practical preparation
Confirm whether the company has inadequate or no profits for the relevant year; check the applicable limit under section 197 and Schedule V; document how each of the five factors was considered in the board and member papers; record the approval under section 196 or section 197.
Practical checklist
Do
- Minute the consideration of each statutory factor.
- Check the current limits under section 197 and Schedule V before fixing the amount.
Avoid
- Do not fix remuneration above the limits specified in the Act.
Illustrative example
Hypothetical: loss-making company appoints a managing director
A company with losses wants to appoint an experienced managing director.
Limits
The company identifies the limit that applies under the Act for companies with inadequate or no profits.
Factors
The Board and members consider the financial position, the candidate’s other pay, qualifications and experience.
Approval
The appointment and remuneration are approved under sections 196 and 197, with the factors minuted.
Outcome
- The documented consideration of the statutory factors supports the remuneration fixed.
Glossary
- Inadequate profits
- Profits insufficient to support managerial remuneration within the normal percentage limits of section 197.
- Managerial remuneration
- Remuneration of directors, including managing and whole-time directors, and managers, under Chapter XIII.
Frequently asked questions
Does the Central Government still fix remuneration under section 200?
No. The words "the Central Government or" were omitted with effect from 12 September 2018. The heading was not amended and still mentions the Central Government.
Can the company pay any amount it likes?
No. It must stay within the limits specified in the Act and consider the five factors listed in the section.
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Contact BizeneedLast updated 11 October 2026