Q.Why is an investigation committee appointed?

Remuneration payable to a full-time Managing Director is limited to 5% of the company's net profit — the correct option is (B).

Managerial remuneration under the Companies Act is fixed as a percentage of net profit, not of sales, share capital or reserves. For a company with adequate profits:

• if there is one managing/whole-time director, the maximum remuneration is 5% of net profit;
• if there is more than one, the overall limit is 10% of net profit; …

The last-resort punishment for repeated indiscipline is ending (completing/terminating) the employee's service — option (C).

Disciplinary action follows an escalating ladder:

1. Oral or written warning.
2. Fine or withholding of increment.
3. Demotion (reduction in rank/pay) — a corrective step.
4. Transfer — moving the employee elsewhere.
5. Termination / completion (ending) of service — the most severe step, applied only when all lesser measures fail and indiscipline continues. …

An investigation committee is appointed to inquire into a specific matter/complaint and report the facts so a fair decision can be taken.

An organisation appoints an investigation (inquiry) committee when a particular issue needs to be examined carefully and impartially before any action is taken — for example, a serious complaint, a suspected irregularity or misconduct, an accident, or a dispute. The committee is entrusted with the task of gathering evidence, questioning the persons concerned, ascertaining the true facts free from bias, and then submitting a written report with its findings and recommendations. This helps management or the authority concerned to decide justly on the basis …