Hi Ankuar
Thanks for reply...
Refer the below mentioned details related to sitting fees and lemme know your opinion on this...
Sitting fees
The proviso to clause 83 in the draft does specifically provide for payment of sitting fees to a director other than a managing director or a director in whole-time employment for payment of sitting fees for attending each meeting of the board or committees thereof not exceeding the amount as may be prescribed.
An anomaly in Section 309(2) is that the fees payable to managerial personnel, subject to shareholders approval, in addition to substantive remuneration is permissible.
This grey area must be clarified. But this brings another difficulty for the management: As per Section 198(2), the aforesaid percentage shall be exclusive of any fees payable to directors under Section 309(2).
This gives a leverage to make payment of sitting fees to the non-executive directors without including such fees in the overall limit of remuneration payable to non-executive directors as provided under Section 309(4).
Since most of the listed companies are hit by Section 269 mandating the appointment of whole-time directors/managing director, the overall percentage of remuneration payable to non-executive directors is pegged at 1 per cent of net profit. Under the proposed clause 83, this ceiling has remained unchanged so much so that sitting fees payable will also come within the overall ceiling of 1 per cent.
At present, there is another advantage for non-executive directors simplicitor who are not independent directors can receive remuneration by way of sitting fees such an amount as may be prescribed; and non-executive directors who are independent directors may receive remuneration in the manner prescribed under sub-section 4 of the existing Act or sub-section 4 (4) of clause 83. Thus, by deleting Section 198(2), the sitting fees payable will also come under the definition of remuneration and the quantum crunch.
The Concept Paper, unfortunately, does not address the thorny issue of remuneration to directors, more particularly independent directors.
Clause 83 merely retains the existing provisions of Section 309 of the Companies Act, 1956. In the process of consolidation and grouping of different sections, Section 309(2), which exempts the sitting fees from the ceiling, has been deleted.
As a result, sitting fees payable to all non-executive part-time directors is limited to 1 per cent given that most listed companies are hit by the provisions of Section 269 mandating the appointment of managing and whole-time directors. And roping in persons with expertise and talent will be difficult unless commensurate remuneration is paid.