Professional Fees Given to Director

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Juhi (Querist)
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18 November 2010 Kindly help me out as regard to any formalities that needs to be complied with in an infrastructure based company pays Professional Fees to its Director who is an Architect by Profession.
TDS u/s 194 J is deducted and paid.
Any particular compliance / reporting required under Company Law

Ankur Garg

Ankur Garg (Expert)
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18 November 2010 Please go through proviso to section 309(1). The same fee must be approved by the board through a board resolution.

Kindly go through section 309 very carefully.

Also share the status of company...whether it is public or private..?

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udit sharma

udit sharma (Expert)
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19 November 2010 Hi....

Any fees paid to the Directors for the services rendered by them in their professional capacity shall not be included in the remuneration of Directors provided:

1. The services rendered by the Director are of a professional nature, and

2. In the opinion of the Government the Director possess the requisite qualification for the practice of the profession.

Hence,in addition to what Ankur Sir said as per my opinion,u will have to make an application under section 309(1) to the Central Government for the purpose of obtaining a certificate from it stating that in its opinion, the Director concerned possesses the requisite qualification for the practice of the profession.

However, the provisions of section 309 of the Companies Act, 1956 are not applicable to a Private Company which is not a subsidiary of a Public Company.

Best Regards and God Bless u

Udit Sharma

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Juhi

Juhi (Querist)
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19 November 2010 Thanks to all for the valuable Guidance.

In the mentioned case, the company is a Private Company. So approval of Board shall be sufficient.