14 March 2011
1. A WTD can be appointed for a period of more than 5 years at a time.
2. As per the provisions of section 309(3) of the Companies Act, 1956 a MD or a WTD can be paid remuneration by monthly payment or by way of a fixed commission or partly by one way or other, provided:
in case there is only one such director, the remuneration shall not xceed 5 % of the net profits of the Company to be determined as per the provisions of section 349 & 350 and if there is more than one such director, 10% of the net profits of the Company.
Ans. 3 if the WTD is appointed for 3 years, then the respective payment details should be only mentioned.
14 March 2011
1. Section 317 of the Companies Act,1956 does not apply to the appointment of whole time director's. Therefore, there are no restrictions for the tenure of the appointment of whole time director's. 2. If appointed for more than three years remuneration should be fixed by way of special resolution. Refer Ntfn. GSR 36(E) dated 16/01/2002. 3. I didn't get the question. However, either monthly or yearly option can be selected and tenure as in 7(e).
Guest
Guest
(Querist)
14 March 2011
Thanks a lot for the responses.
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Still I have the following queries. Please see :
ABC Limited appointed WTD with the approval of shareholders for a period of 5 years with a total remuneration of Rs.46 Lacs, which is in accordance with Sch. XIII. (Company’s Effective Capital is more than Rs.100 Crores).
Request 1 :
I would like to know the relevant provisions or sections, which confirm that tenure for WTD’s appointment (in public company) has no restriction at all (while Section 317 is for MD not to be appointed for a period of more than 5 years).
Filing of Form 25C within 90 days from the date of appointment of WTD – This is clear. No doubt.
Query 1
In the notification dated 16.01.2002 referred above, there is a mention that
(iii) a special resolution has been passed at the general meeting of the company for payment of remuneration for a period not exceeding three years;
Here, I request to clarify my ignorance :
Appointment of WTD – 5 years. Payment of remuneration – not exceeding three years.
Should the company again have the shareholders approval for the payment of remuneration for the last two years i.e. Year 4 and Year 5 ?
Ans :……………….
Whether any e-form is involved for the payment of remuneration for the said two years.
Ans :……………….
Please advise the common practice followed on such situation.
14 March 2011
Sir Regarding section 317, quote from Guide to Companies Act,by Sri. A.Ramaiya ,17th edition page 3081(6th para). " It is also to be noted that this section does not apply to a whole time director,other than a managing director,so that the term of appointment of such whole time director need not be limited to a period of five years".
For the rest, my observation is reserved since I have not practically handled such a case leaving the query open for the expert comments of our club members.
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