Shraddha Shukla (Corporate law Consultant) (346 Points)
15 November 2010Hi ,
can an employee having shares in private company and drawing a monthly remuneration of 50,000 be appointed as a non executive director of the company.
thanks in advance
nidhigoel89
(Company Secretary )
(594 Points)
Replied 15 November 2010
Hello!
As per my views it is not possible. A non executive director is a director who does not have any pecuniary interest in the company other then his remuneration as a director. But in your case he is already a employee who is seeking salary from the co. as well as he is also a shareholder. So, i dont think that it can be happened. Contrary view or further clarification are welcomed.
Nidhi Goel
HARDIK
(COMPANY SECRETARY NCFM (Corporate Governance ))
(664 Points)
Replied 15 November 2010
Agree with NIdhi he can be appointed as executive director.
Ajay Mishra
(Company Secretary)
(74337 Points)
Replied 16 November 2010
Hi
When an employee is appointed as director and he draw remuneration he/she wil come under executive category. Please make sure in filing of Form-32 with ROC.
Regards
CS Ankur Srivastava
(Company Secretary & Compliance Officer)
(17853 Points)
Replied 16 November 2010
Ofcouse he can be appointed as EXECUTIVE Director.
Shraddha Shukla
(Corporate law Consultant)
(346 Points)
Replied 16 November 2010
Thank you all,
The person was drawing salary of 40,000 per month and was aso a shareholder of the company, the then since 13.04.09 he was appointed as an independent non executive director of the company, and continued to draw the salary. the company was converted into a private company on 7.08.09.
now the annual return and balance sheet have been filed. in this case what are the wat is the remedy left. should form 32 and 23 be filed back date from the time of appointment .
kindly share the views as the matter is very urgent.
thanks
Ankur Garg
(Company Secretary and Compliance Officer)
(114773 Points)
Replied 16 November 2010
Today your company is a private company...and adoption of independent director definition which is specifically drafted for a listed entity through Listing Agreements is not a good idea...
According to me and in general (for a pvt company) a director can be an independent NED, even if he is drawing (Transparency is maintained) salary for his work as an employee. So there is no need to repair anything.
Thanks
Shraddha Shukla
(Corporate law Consultant)
(346 Points)
Replied 16 November 2010
| Originally posted by : Ankur Garg | ||
 |
Today your company is a private company...and adoption of independent director definition which is specifically drafted for a listed entity through Listing Agreements is not a good idea... According to me and in general (for a pvt company) a director can be an independent NED, even if he is drawing (Transparency is maintained) salary for his work as an employee. So there is no need to repair anything. Thanks |
 |
sir wont the provisions of section 314 be attracted, and when he was appointed it was a public company .
Ankur Garg
(Company Secretary and Compliance Officer)
(114773 Points)
Replied 16 November 2010
Yes 314 will be applicable...Infact section 314 (1) applicable i.e post approval of SHs through special resolution. All you need to do is---arrange SR in a GM...Plz go through first proviso of section 314(1)(b)...
Hope am not missing anything...Share your contrary view plz...
Shraddha Shukla
(Corporate law Consultant)
(346 Points)
Replied 16 November 2010
its not much clear, sir
other members may also share views
Neha Gupta
(PCS)
(377 Points)
Replied 16 November 2010
Well in my opinion Ankur Sir is absolutely right, you have to file form 23 for a special resolution under Section 314 of the Companies Act, 1956 in any General meeting held between his date of Appointment and date of Conversion of Public Company into Private.
But one thing I would like to ask you whether you have filed form 32 of Director with designation as Additional director or Director, if filed as Director then have you regularized him in the AGM of the Financial year 2008-2009.
Even if u missed this point, I think you need to file only form 23 for SR from back date to rectify your mistake.
Contrary opinions, are most welcomed…….
CS Ankur Srivastava
(Company Secretary & Compliance Officer)
(17853 Points)
Replied 16 November 2010
If he is employee of the Company how can we designate him as Non Executive Director of the Company. The definition defines Non Executive Director not Non Executive Directors for Listed Companies.
Simply, Non Executive Director means the Director who is not in the whole time employment of the Company.
Therefore, in my opinion they must be appointed as Executive Director or they should not continue as employee and appointed as NED.
Shraddha Shukla
(Corporate law Consultant)
(346 Points)
Replied 16 November 2010
| Originally posted by : CS Ankur Srivastava | ||
|
|
If he is employee of the Company how can we designate him as Non Executive Director of the Company. The definition defines Non Executive Director not Non Executive Directors for Listed Companies. Simply, Non Executive Director means the Director who is not in the whole time employment of the Company. Therefore, in my opinion they must be appointed as Executive Director or they should not continue as employee and appointed as NED. |
|
well he is a doctor so may draw salary in his professional capacity, so we can appoint him as a director.
Ankur Garg
(Company Secretary and Compliance Officer)
(114773 Points)
Replied 16 November 2010
| Originally posted by : CS Ankur Srivastava | ||
|
|
Simply, Non Executive Director means the Director who is not in the whole time employment of the Company. |
|
DISAGREE...It is for whole time director and not for Non Executive Director...
NED means a director not drawing salary as a director. A person drawing salary in his professional capacity as an employee may be designated as NED as long as he is not drawing salary as director.
Well this is my personal opinion.
Shraddha Shukla
(Corporate law Consultant)
(346 Points)
Replied 18 November 2010
As per the discussion and detailed analysis, i think there are two options left to correct the mistake
1. either to show the person as WTD from the day of his appointment and file 32,25C, and 23 and then revise the AR as well,
or
2. since the company has been converted into a private company just after 3 months of his appointment as a director, and chances of scrutiny are less, so from current year i shud file 32 and 25 C with change in designation.
also in case of any scrutiny the max. liabilty arising shall be redeposit of the salary to teh compani's account.
kindly suggest
CAclubindia
