Love Kumar (COMPANY SECRETARY) (101 Points)
04 August 2011There are three directors in private limited company. Say X , Y and Z.
X and Y want to pay remuneration of Rs. 17000/- p.m. to their wives.
Acc to me Board Resolution will suffice.
Please express your views. Will there be any difference if Both X and Y are also receiving remuneration in their capacity as a director.
Regards
RG - A Helping Hand
(Company Secretary)
(13867 Points)
Replied 05 August 2011
Hi,
In your case section 314 is not applicable bcoz directors are only receiving their remuneration and nothing else over and above the remuneration. Hence they are not on the position of office or place of profit as per the definition given in section 314(3).
Position of office or place of profit comes when director starts getting anything over and above the remuneration to which he is entitled as such director and that is not true in your case.
So simply pass a board resolution to pay remuneration to the directors’ wife.
One more think in the board meeting director should disclose their interest regarding the transaction u/s 299. However they are not disqualified for voting and for quorum on the resolution as section 300 is not applicable to a private company.
Thanks
RG
AMIT MISHRA
(Legal Professional)
(393 Points)
Replied 05 August 2011
Dear Love,
The paying of remuneration to wives does attract Section 314 as the wives being relatives of directors may be holding office of profit.
The things to be considered are:-
1. Relatives of directors.
2. Nature of employment- The wives are recieving monthly salary i.e. continuous services-314 attracted
3. Type of professional services rendered- if in professional capacityi.e. lawer/doctor etc-314 not attracted
4. Amount paid.
Hence taking into account nature of employment (1 above)in this regard 314 is attracted and a in Company's AGM special resolution in this regard is required.
Thanks & Regards
Amit Mishra
BSamrish & Co.
New Delhi
CAclubindia
