Managing Director and Whole-time Directors

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

07 May 2010 Dear colleagues,

I have this case where a private limited company has just got converted into a public limited company. There are 3 Directors in the company. One is the promoter Director, second is his wife and the third is an employee who has been appointed as a Director. The promoter Director has become an NRI. Neither the promoter director nor his wife receive any remuneration. The wife is not involved in the management of the company. The remuneration received by the employee who has been designated as a Director is revealed as remuneration paid to a whole-time director, in the financial statements.

Is the above constitution of Directors right? Does anything need to be done to rectify? How does one constitute an Audit Committee for this company?

Ankur Garg

Ankur Garg (Expert)
Follow

07 May 2010 To figure out the need of audit committee check your paid up capital of your company.

Section 292A---Every public company having paid-up capital of not less than five crores of rupees shall constitute a committee of the Board knows as "Audit Committee" which shall consist of not less than three directors and such number of other directors as the Board may determine of which two thirds of the total number of members shall be directors, other than managing or whole-time directors.

Hope you have complied with the legal provisions of section 269 if paid up capital is more than 5 crore.

Querist : Anonymous

Querist : Anonymous (Querist)

07 May 2010 The paid-up capital is Rs 5 crores.

Cd u pls answer the queries raised by me on whether constitution of the Audit Committee is right. Can the MD be a NRI?

Upgrade to CAclubindia Pro. Subscribe Now!

Rasesh

Rasesh (Expert)
Follow

07 May 2010 The NRI director can be a member of the Audit Committee. The wife of the Promoter director can be the Chairperson of the Committee. The employee director can be the third member.

Please also confirm for your own benefit whether the Employee director has been appointed as an Wholetime Director or it is just because he is an employee, you are assuming him to be a wholetime director. If the person is assumed as a WTD, it would be incorrect to do so.

Ankur Garg

Ankur Garg (Expert)
Follow

08 May 2010 You have to fulfill the requirements of section 269 for treating the employee as WTD as mentioned by Rasesh.

Go through section 269 carefully.