Suppose Mr. X relative of a director is appointed as MD with salary of Rs.70000/- which is over & above the salary he is getting as a director. Now since Sec 314(1)not apply to appointment of MD,manager etc but As per Sec314(1B) three conditions are satisfied:- 1. Person other than director. 2. Remuneration more than Rs.50000/- 3. MD, Manager etc not exempt under this saction. He can hold office or place of profit after Sr and approval of CG as per Sec314(1B) Now i m confused whether that person hold office or place of profit or not? please clarify rule U/s 314(1) and 314(1B).
17 May 2010
314(1) talks about the Director himself holding office. i.e. if he gets any sum from Company beyond what is allowed by Shareholder or any relative if he draws remuneration uoto 10000 p.m.
While 314(1B) talks about relative or firm or Pvt Co. in which director is interested and if remuneration exceeds 50000 p.m. than Central Govt Approval is required.
In your case as Director becoming MD and getting remuneration not less than 50,000 will not fall under Section 314(1) or 314 (1)(B) if it is within the Schedule XIII limit and approved by memebers of the Company
18 May 2010
Even if a relative of director is appointed as MD and if he is getting total remuneration above 50,000, he will not be falling under 314(1B) if it is approved as per Schedule XIII and 309(3).
But if Members has approved only 70,000 and other remuneration is not approved by Members as MD than it will fall under Section 314(1B)and you need to get CG approval if paid 50000 or above.
21 May 2010
Dear all, I read all the suggestions given by you and reaches on the following conclusion on this .Check whether I m right or not:
Firstly Mr. X is a relative of director that means Sec 314(1) and 314(1B) both are applicable at this stage. Then he appointed as MD now Sec314(1) is not applicable and Sec314(1B) is applicable and lastly he is getting salary more than 50,000/-over an above . the salary which is getting as a director ,therefore SR and approval of CG is required.
Give your views on this also assuming Mr. Is appointed as Chief public relation officer on a salary of Rs 55,000/- (supposing as a director he is already getting 75,000) . Now in this case both Sec314(1) and Sec314(1B) are applicable but since salary is Rs.55,000 ,Sec314(1B) is applicable and so SR and CG approval both are required
CAclubindia
