Sample/format of Managing Director's Service/Employment Agreement
This Agreement is made and executed on this _th day of _(month)_____, 2014 at ________, by and between ____(Company Name)______, _________(Address)__________, and ____(Name of Managing Director)________, son/daughter of ________________ resident at ______(Address)_____________.
WHEREAS vide Resolution of the Board of Directors of ____(Company name), dated _________________ and an agreement dated ________________ between Mr. / Ms. _________________ and the Company, Mr. / Ms. _______________ was appointed as the Managing Director of the Company with effect from ______________ for a period of 5 years. The remuneration of Mr. / Ms. _______________ has been approved for a period of 3 years by the remuneration committee in their meeting held on ___________.
NOW THEREFORE THE PARTIES HERETO AGREE AS FOLLOWS:
Mr. / Ms. ______________ has been appointed as the Managing Director of the company with effect from ______________________ for a period of five years. The terms and conditions of the remuneration committee as approved by the Remuneration Committee is as below:
Rs. _______ (Rupees _______ only) per month in the Scale of Rs. _______ to Rs. _______.
(b) INCENTIVE / COMMISSION
Equivalent to 1% of the net profits of the Company, subject to a ceiling of an amount equal to annual salary.
The Company shall provide free un-furnished accommodation. The value of benefit will be determined as per the Income Tax Rules.
(b) REIMBURSEMENT OF MEDICAL EXPENSES
Reimbursement of medical expenses (including insurance premium for medical and hospitalisation policy, if any) incurred for self and family, subject to a ceiling of one month’s salary or three months’ salary over a period of three years, as per Rules of the Company. For the above purpose, “Family” includes spouse, dependent children and parents.
(c) LEAVE TRAVEL CONCESSION
Leave Travel Concession for self and family, once a year, incurred in accordance with the Rules of the Company. For the above purpose, “Family” includes spouse, dependent children and parents.
(d) PERSONAL ACCIDENT INSURANCE
Personal accident insurance cover of an amount, the annual premium of which does not exceed Rs. 15,000.
(e) CONTRIBUTION TO PROVIDENT FUND AND SUPERANNUATION FUND
Contribution to Provident Fund and Superannuation Fund, as per Rules of the Company, to the extent these, either singly or put together, are not taxable under the Income Tax Act, 1961.
(f) LEAVE AND ENCASHMENT OF LEAVE
As per the Policy of the Company.
(g) GRATUITY AND / OR CONTRIBUTION TO GRATUITY FUND
As per the payment of gratuity act 1972 and including any amendment thereto.
(h) USE OF CAR AND TELEPHONE
Company maintained car with driver for use on Company’s business, telephone at residence and cellular phone provided by the Company will not be considered as perquisite. However, personal long distance calls and use of car for private purposes shall be borne by the Director.
(i) REIMBURSEMENT OF EXPENSES
Reimbursement of entertainment, travelling and all other expenses incurred for the business of the Company, as per Rules of the Company.
III. REMUNERATION IN THE EVENT OF LOSS OR INADEQUACY OF PROFITS
Where in any financial year, the Company has no profits or its profits are inadequate, the foregoing amount of remuneration and benefits shall be paid, subject to Incentive / Commission being restricted to 50% of annual salary and applicable provisions of Schedule V to the Companies Act, 2013.
(a) Net profits for this purpose shall be as per computation of Net Profits under Section 198 of the Companies Act, 2013.
(b) The remuneration package is well within the overall limit prescribed under Schedule V to the Companies Act, 2013, which permits the Company to provide for an overall remuneration, not exceeding 10% of the Net Profits in any year, to all its Directors.
IN WITNESS WHEREOF, the Parties have executed this Agreement on the day, month and year first above mentioned.
Signed and Delivered by the