The Companies Act, 2013
CHAPTER XIII: APPOINTMENT AND REMUNERATION OF MANAGERIAL PERSONNEL
Section 198: Calculation Of Profits
Bare Act
(1) In computing the net profits of a company in any financial year for the purpose of section 197, -
- credit shall be given for the sums specified in sub - section (2), and credit shall not be given for those specified in sub - section (3); and
- the sums specified in sub - section (4) shall be deducted, and those specified in sub - section (5) shall not be deducted.
(2) In making the computation aforesaid, credit shall be given for the bounties and subsidies received from any Government, or any public authority constituted or authorised in this behalf, by any Government, unless and except in so far as the Central Government otherwise directs.
(3) In making the computation afores… Read the complete text with KanoonGPT Pro.
Simplified Act
Explanation:
When a company calculates its net profits for a financial year to determine how much it can pay its directors (as per section 197), it must:
- Add certain amounts (as mentioned in part 2) and ignore others (as in part 3).
- Subtract specific expenses (listed in part 4) but not subtract others… Read the complete text with KanoonGPT Pro.
Explanation using examples
Imagine a company, ABC Ltd., is calculating the remuneration payable to its directors at the end of a financial year. To comply with Section 198 of the C… Read the complete text with KanoonGPT Pro.
