Compulsory requirement for prior approval for payment of remuneration exceeding the ceiling limit of Rs. 48,00,000 p.a. or Rs. 4,00,000 p.m.

In the case of a company having negative or zero effective capital and proposes to pay managerial remuneration to a person in excess of Rs. 48,00,000 p.a. or Rs. 4,00,000 p.m. calculated on the scale in terms of the amendments made in Schedule XIII of the Companies Act, 1956 vide Notification No. GSR 36(E), dated 16th January, 2002 the appointment of such managerial person shall be made subject to the prior approval of the Central Government.

Originally posted by : RITU BAJAJ
	Originally posted by : Ankur Garg Originally posted by : RITU BAJAJ Dear Jyoti,  We are having this remuneration discussion with regard to a director of a Pvt. Ltd. Company. In a public limited company a director cannot be paid remuneration unless he is appointed as a WTD. As per Section 309(3) "except with the approval of the Central Government such remuneration shall not exceed 5% of the net profits for one such director, and if there is more than one such director, 10% for all of them together" Thus you need to take Central Government approval.   Dear Ritu, You have used this line in your previous reply which is not correct read with section 309(4). In a public limited company a director cannot be paid remuneration unless he is appointed as a WTD. Kindly check yourself and revert.   Dear Ankur Sir, Its true that a director can be paid remuneration but its only possible by having consent of the Central Government. While in most of the moderate level of corporate houses people do hesitate or we can say they try to avoid approach to Central Govt. for approval. Thus in that case the normal practice is that the director is appointed as a WTD if they need to pay him remuneration. Plz comment on above.

Yes Ritu you are absolutely right. I overlooked sub section (4) without a proper reading. Thanks yaar for correcting me. If i come across any lope hole i'll definitely share it with you.

Dear Friends

We have missed the basic fact in the question. The person who is being appointed as WholeTime Director is already an employee of the Company.

Hence on  being appointed as Director, he becomes whole time Director.

Further there is no need to to appoint a person as Additional Direcor initially and then appoint as Whole time Drector.

The Employee on being appointed as Director becomes whole time Director.

Further as the Company is Private Limited Company, Articles of Association of the Company needs to be checked in relation to the Powers of the Board for Appointment of Director/Whole Time Director.

Regards

Ashish Gaggar

Originally posted by : Ashish Gaggar
	Dear Friends We have missed the basic fact in the question. The person who is being appointed as WholeTime Director is already an employee of the Company. Hence on  being appointed as Director, he becomes whole time Director. Further there is no need to to appoint a person as Additional Direcor initially and then appoint as Whole time Drector. The Employee on being appointed as Director becomes whole time Director. Further as the Company is Private Limited Company, Articles of Association of the Company needs to be checked in relation to the Powers of the Board for Appointment of Director/Whole Time Director.   Regards   Ashish Gaggar

Dear Sir, I think you have missed the original question posted by Mr. Satendra Kumar Ji.

In the beginning this discussion was about a private company and explanation to section 269 along with section 269 is not applicable to a private company.

Thanks

Also you need to file Form 32 twice. Once as Additional Director and second time as Whole Time Director for change of designation

Originally posted by : Ankur Garg
	First you have to appoint him as additional director as per section-260. Then pass the next resolution to appoint him as WTD. Further if you fail to regularise him as regular director then he will automatically cease to be a WTD. So the agenda of your BM would be: 1. Appointment of Mr. X as Additional director. 2. Appointment of Mr. X as WTD.   Regards

Dear Mr. Ankur,

As suggested by you, we decided to appoint Mr. X (an employee) as AD in the BM. Thereafter, in the same BM, we decided to appoint Mr. X as WTD on the remuneration decided by the Board and passed BM resolution accordingly. Now my query is regarding filing of Form 32. Is one Form 32 to be e-filed for AD and WTD or two seperate Form 32 are to be filed - one for AD and another for change in designation as WTD? I tried to provide both information in one Form 32, but Form 32 is not accepting second entry for the same director.

Secondly, is any other form to be filed for remuneration as Form 32 is silent regarding remuneration part.

Thirdly, if BM in the above example, is convened on say 01.03.2010 (as we want to appoint Mr. X as WTD w.e.f. 01.03.2010), other than additional late fee, is there any other penalty applicable on the company for late filing of Form 32.  

Please guide me and advise me further,

Thanks

1.In my case, Factories Act is applicable to us, so we are plannin to appoint an employee as the Director, who shall subsequent to his appointment would become the occupier(as per SC judgement in case of J K Industries, occupier has to be a Director of the Company).

2. As regards his appointment, in the forthcoming April 2010 meeting, we wish to make his appointment.

Now the query is, Firstly, whether we need to appoint him Additional Dir in BM and then Appointment as WTD with remuneration in General Meeting.

So now during that period ie forthcoming meeting (April 2010) to Sept 2010 (GM), Can we pay the employee cum director remuneration.

Pls note, mine is a public limited company

Regards

Priyanka. 

Dear Ankurji,

I read all the posts on the topic, please confirm me whether I am right or not.

In a private Ltd. co., if the Articles provides for, a director can be appointed in Board Meeting & file form 32 within 30 days & any director appointed by the board is an additional director, whose term of appointment is till the next AGM, where it should be regularised.

Now my query is :

1) if such director has been appointed by the board resolution which terms him as "director" & not as "Additional Director" & his term as "for life or until he resigns", then whether the same has to be regularised in the coming AGM.

2) My next query not related to the above appointment but reg appointment of a director as MD

In the board meeting, (Articles provides for) of pvt. ltd. co. an existing director has been appointed as MD for life or until he resigns (without modifications in the remuneration). then at such times, whether even in this case the change in designation is only till the next AGM & whether this designation lapses, if it's not regularised.

please reply to my queries for my immediate help 

thanks,

with regards