Guarantee Commission
This query is : Resolved
15 October 2010
How the commsssion be paid to Directors for the guarantee given by them?
Regards,
Rishi
Regards,
Rishi
15 October 2010
Guarantee commission paid to directors is not a remuneration within the meaning of Section 309 of the Companies Act,1956 and therefore, approval of Central Government is not necessary.
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16 October 2010
Is a Board resolution sufficient to pay guarantee commssion to the Director?
Regards,
Rishi
Regards,
Rishi
20 October 2010
Hi
Payment of guarantee commission
In Suessen Textile Bearings Ltd v. Union of India[30], the court held that guarantee commission paid to directors for giving surety against loans on credit facilities taken by the company from financial institutions is not remuneration for any professional services within the meaning of S. 309 and therefore, approval of central government is not required. The directors rendering guarantee does not render manual, clerical, technical, supervisory or administrative service. He gets the commission for the risk which he bears and that has nothing to do with his directorship.
Regards
Payment of guarantee commission
In Suessen Textile Bearings Ltd v. Union of India[30], the court held that guarantee commission paid to directors for giving surety against loans on credit facilities taken by the company from financial institutions is not remuneration for any professional services within the meaning of S. 309 and therefore, approval of central government is not required. The directors rendering guarantee does not render manual, clerical, technical, supervisory or administrative service. He gets the commission for the risk which he bears and that has nothing to do with his directorship.
Regards
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20 October 2010
Board of Directors of the company will consider on the above matter.
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