17 March 2008
The law relating to sitting fees is contained in Section 309(2) of the Companies Act, which states that a `director' may receive remuneration by way of a fee for each meeting of the board of a committee thereof attended by him. Therefore, the legal requirement to pay sitting fees arises from the express provisions of the Companies Act itself. The issue for consideration here is whether sitting fees would come under the category: a) fees for professional services; and b) fees for technical services.
By attending board meetings, a director is not rendering any professional services. Further, the term professional service refers to a few types of services contained in the definition which, inter alia, does not include payment relating to sitting fees. Coming to technical services, by attending and participating in board meetings, directors are not rendering any managerial, technical or consultancy services.
The question for immediate consideration is whether the sitting fees paid to a director would come under the clause "fees for technical services".Than it will be attract sec.194J
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