Ruchie Khanna (Company Secretary) (123 Points)
07 October 2010Dear All,
A public ltd. company has 2 non-executive directors on its Board and propses to pay consulatancy fees to them.
The paid-up capital of the Company is less than 50 lacs. Would payment of consultancy fees attract the provisions of Sch XII or Section 309.
Please suggest on what procedure should be adopted by the company for the same and if there would be any limitations on the amount of fees to ensure compliance with the Act.
Thanks & Regrads,
Ruchie
Ankur Garg
(Company Secretary and Compliance Officer)
(114773 Points)
Replied 07 October 2010
Hi Ruchie,
Kindly appreciate being a public company all the provisions of remuneration are applicable to your company including section 198, 309 and sch XIII.
Payment of consultancy fees to two non-executive directors on your Board is not an issue. Kindly check the qualification of non-executive directors with reference to proviso to section 309(1). If they possess the requisite qualification to the satisfaction of CG and CG grants its approval for payment of consultancy fees to two non-executive directors, then the same would not be covered in managerial remuneration percentages given u/s 309(4).
Revert if there is any doubt.
Best Regards
Ruchie Khanna
(Company Secretary)
(123 Points)
Replied 09 October 2010
Dear Sir,
The Directors do not posses any professional qualificationshence remuneration to them can be paid only under provision of Section 309(4) i.e as % of Net profit or with approval of central government.
My query now is that if the Company intends to pay commisson to the directors (3% of Net Profit) can it be paid now taking into account the NP as on 31-03-10.??
Thanks & Regards,
Ruchie
Kunal Trivedi
(CS)
(30 Points)
Replied 27 April 2011
Dear All,
I require some further clarifications.
The brief facts of my case is as below:
Mr. A was a MD of "XYZ Ltd" and his son Mr. B was WTD. Mr. A steps as MD and is redesignated as NED whereas his son Mr. B is redesignated as MD. Further, it is proposed to pay Mr. A who is now a NED consultancy fees (amount would be more than Rs. 250000 p.m.). Kindly advice whether only SR in General meeting is enough or CG approval is also required considering(sec 314 1B) the fact that he is also a Relative of a Director.
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