Clarification on Section 314

This query is : Resolved

geeta (Querist)
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29 October 2009 Section 314 is applicable to a private limited company.

If a relative of the Director of a private limited company is appointed as a consultant to the company at a monthly remuneration of Rs 10,000, i presume this will fall under Section 314. What are the formalities the private limited company will have to comply in this case?

Secondly, if an employee of this company is subsequently appointed as a Director in the same company, such that his existing salary is shown as Directors' remuneration, will Section 314 be applicable?

Jagruti (CS)

Jagruti (CS) (Expert)
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31 October 2009 For a payment of remuneration to relative, special resolution is required & Form 23.

If the employee is appointed as director he will be considered as whole time Dr as Sec269 and if remuneration is shown & approved as Director remuneration than it will not fall u/s 314