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Applicability of Section 314

R Jalaja (CS) (40 Points)

09 September 2010

Mr. S is a director of a private limited company with foreign holding. Now, the company wants to pay consultancy fees (less than Rs.50,000 p.m.) to one foreign company in which Mr. S is a Director in that foreign company. Will this payment attracts Section 314 of the Act & approval of the shareholders.

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3 Replies

Ajay Mishra (Company Secretary) (74337 Points)
Replied 10 September 2010

Dear Friend

Question is not complete, please complete.

Regards

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R Jalaja (CS) (40 Points)
Replied 10 September 2010

Sir,

Mr. S is a director of ABC Private Limited with 93% foreign holding. Now, ABC Private Limited wants to pay consultancy fees (less than Rs.50,000 p.m.) to one foreign company (X LTD.,) in which Mr. S is also a Director. Will this payment attracts applicability of Section 314 of the Act . I think Section 314 is applicable to private limited companies. My query is: whether this matter has to be approved by the shareholders in general meeting (as the limit is below Rs.50,000/- only). Kindly clarify me in this regard with respect to payment of consultancy fees to Mr. S. by ABC Private Limited & procedure for doing this and related filing formalities.

Thank you Sir,

Ajay Mishra (Company Secretary) (74337 Points)
Replied 10 September 2010

Dear Friend

Your queries is not covered under section 314 of the Companies Act, 1956, it generally paid consultancy fee to x Ltd in which Mr. s is director. In your case there is no appointment on any place of profit which deal section 314 of the Companies Act, 1956.

Regards

CS Ajay Mishra