Section 314

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

06 December 2012 Mr. A Managing director of ABC company appoints his wife as a engineer in the comapny, who is professionaly qualified and pays 30,000 P.M as salary will this attract section 314.

Amol S Joglekar

Amol S Joglekar (Expert)
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06 December 2012 Except with the consent of the company accorded by a special resolution is the KEY.

Querist : Anonymous

Querist : Anonymous (Querist)

06 December 2012 But sir As per section 314(3)(a) special resolution is required only when she takes a salary above to which she is entitled to. Pls clarify

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Ajay Mishra

Ajay Mishra (Expert)
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06 December 2012 Hi

No, Section 314(1) will not apply if she is the relative of MD or Manager.

Ajay Mishra

Ajay Mishra (Expert)
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06 December 2012
Circumstances u/s 314(1) under which special resolution is not applicable

Under the following circumstances, the special resolution shall not be required for appointment of a person on the office or place of profit:—

1. If the monthly remuneration is less than Rs. 50,000 p.m.;
2. If the office or place of profit held by such person(s) in the capacity of managing director/whole-time director/manager/banker/debentureholder trustee;
3. If relative of director has been appointed before becoming director in the company;
4. If director of subsidiary company hold office or place of profit in holding company;
5. If such person is rendering professional advice to the company including director who is consulted or who gives his professional advice to the company occasionally and receive remuneration for such service;
6. If a company purchases or sell materials from or to a director of the company or any of the persons mentioned above to which section 297 will apply.

Any person appointed to an office of agent for the sale of the output of the company will be deemed to be holding an office or place of profit under section 314(1).

Querist : Anonymous

Querist : Anonymous (Querist)

06 December 2012 In my case she is a relative of the Director.Hope in this case also it will not apply

Ajay Mishra

Ajay Mishra (Expert)
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06 December 2012 Hi

Yes, it will not apply but the matter should placed before the Board that she is relative of director for future reference.

Querist : Anonymous

Querist : Anonymous (Querist)

06 December 2012 Thank you Sir

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Ajay Mishra

Ajay Mishra (Expert)
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06 December 2012 My pleasure................

Querist : Anonymous

Querist : Anonymous (Querist)

06 December 2012 Dear Sir

Can you please explain in which all cases does section 314 gets attracted?

Ajay Mishra

Ajay Mishra (Expert)
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06 December 2012 I have given in my earlier reply.

CS Ankur Srivastava

CS Ankur Srivastava (Expert)
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06 December 2012 Yes, section 314 would apply.

Solution:

Make her director of the company and give salary, in such case section 314 would not apply.

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