22 March 2011
Mr. X & Mrs. X are appointed as Directors of a Private Company. They were drawing monthly remuneration of Rs. 30000 each during previous year. Ms. Y daughter of Mr & Mrs X is appointed as a whole time director. They propose to enhance the remuneration to all the Directors as below: Mr. X Rs. 75000 per month Mrs. X Rs. 50000 per month Ms. Y Rs. 45000 per month As far from my interpretation of Section 314, there is no office of profit if the directors do not take away anything over and above the fixed remuneration. But my doubt is the appointment of the Daughter as Whole time director. Is there any need to Notify the Central Govt. regarding the appointment or enhancement of remuneration? Thanks in advance...
22 March 2011
Appointment to the Director's office will not amount to holding office or place of profit and hence will not attract Section 314 of the Companies Act, 1956. However Section 299 and 301 of the Companies Act, 1956 will apply.
Restrictions on managerial remuneration will not apply to private company. Accordingly no CG approval for appointment or enhancement of remuneration is required.
WTD in a private company may be appointed by a Board Resolution unless the articles provide otherwise.
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