urgent - reduction in md remuneration

I am working in a closely held public limited company. Our MD was recently re-appointed by the Board / Members for a period of 3 years with payment of remuneration. He will be holding office until the year 2011. The appointment and payment of remuneration was approved by Remuneration Committee, Board of Directors and Shareholders (at AGM) in compliance with the provisions of companies act, 1956.

Consequent to the economic slow down it has been proposed to reduce the salaries of all employees and staff by 10% wef January 2009. this also includes Managing Director.

Kindly clarify whether reduction in Managing Director remuneration requires approval of Board of Directors and Shareholders of the company.

with regards



if at the AGM the special resoltuion was so approved to gve powers to the board of directors to alter the said remineration further, you can call a board meeting to pass a resolution to this effect. 



yes, as Mr.Manish said, the matter related with the company so obviously for such a decision should be taken by way of resolution... in AGM or EGM .... here what i think once the decision taken by the board to reduce the pay it applies to all whoever getting paid..... 

Advocate & Consultant

As per the Companies Act,

  • Where there are no profits or the profits inadequate, the board of directors having the power to redue and determined the managerial remunaration by way of passed resolution,

  • Further, the said resolution  subject to approval of of the share holders at the next annual general meeting.  

  • And check with your Articles of Association, its requires any formalities or which kinds of resolution passed in this regard.


U/s.309(1) of the Companies Act, EGM or AGM has to resolve on the remuneration of the MD.

Advocate/ Senior Partner

Dear Mr. Muralidharan,

The answer given by Mr. Manivannan is correct. The Board is empowered to pass a resolution to reduce the remuneration of the MD taking into consideration the financial position of the company. The same can be ratified at the next AGM or EGM

Thanks, Ramakrishnan ADV 

Advocate & Solicitor

Good and Valuable Information.



can u say under which section

Company Secretary

Dear Members,

Can you provide me with the format for the same i.e. reduction in directors remuneration.

Thanks & Regards,





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