Page 308 - DCOM201_ACCOUNTING_FOR_COMPANIES_I

Unit 12: Divisible Profits and Managerial Remuneration

Complaints Notes
On the complaints side, a simple reward programme to encourage staff to suggest ways to
prevent complaints reoccurring would benefit both customers and the broker. The reward
programme could include points for the number of recommendations made and a financial
reward where a recommendation is implemented and shown through MI to reduce
complaints and improve service in that area.

12.5 Summary

 Profits available for the distribution among the shareholders of a company as dividend
are called divisible profits.
 The profits are calculated by comparing the income and expense of one year.
 The necessary adjustments are made before calculating the profit of a business concern.

 The accounting principles are followed.
 The directors have the right to create provisions, reserves and funds out of
business profits under the articles of association and the Companies Ordinance 1984.

 The remuneration which is paid to the managerial personnel (directors, managing directors
and managers) by the company is called managerial remuneration.

12.6 Keywords

Breach of Contract: Breaking rules of a legal duty.

Preliminary Expenses: All the costs that are incurred when a company is formed.
Remuneration: Money paid for service.

12.7 Review Questions

1. Who can be appointed a managing director of a company?
2. What do you mean by managerial remuneration?

3. How is net profit determined for managerial remuneration u/s 349?
4. What are the provisions of remuneration of a part-time director of a public company?
5. What are the provisions regarding the remuneration of a whole-time director u/s 309?
6. What do you mean by managerial remuneration? Describe the provisions relating to
maximum and minimum remuneration.
7. What is the meaning of managerial remuneration? How is the profit calculated for
managerial remuneration? Describe in detail.
8. What provisions have been made in the Companies Act in connection with depreciation
and remuneration of whole-time director? Describe.

9. Describe the provisions of the Companies Act, 1956 as amended up to date relating to the
ascertainment of remuneration of the members of managerial staff.
10. Give the main provisions of company law regarding managerial remuneration.

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