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Manpreet Kaur, Lovely Professional University Unit 12: Divisible Profits and Managerial Remuneration

Unit 12: Divisible Profits and Managerial Remuneration Notes

CONTENTS
Objectives
Introduction

12.1 Principles of Divisible Profit
12.2 Meaning of Managerial Remuneration
12.3 Provisions Regarding Overall Maximum and Minimum Limits

12.4 Remuneration to Directors
12.5 Summary
12.6 Keywords
12.7 Review Questions
12.8 Further Readings

Objectives

After studying this unit, you should be able to:
 Know principles of divisible profits

 Explain meaning of managerial remuneration
 Define provisions
 Understand remuneration to the directors

Introduction

The management and administration of a company is delegated to the managerial personnel as
per the provisions of the Companies Act.
Divisible Profits: According to Black and White Publishing Company (1901) profit available for
dividend means net profits after making any deduction which the directors can duly make profit
which can be distributed legally in the form of dividends to the shareholders of the company are
called divisible profits.

!
Caution There is no any particular rule about the determination of profit. By company law
has laid down the following rules or a principle which guides us to determine the divisible
profits.

12.1 Principles of Divisible Profit

Following are the important principles of divisible profits :

1. According the Company Rules: The articles of association are the rules of the company.
The directors are entitled to distribute the profits under rules. They also follow the company
law. The dividend can be paid out of revenue profit.

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