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Director remuneration

vijay (CA) (158 Points)

18 September 2012

A private ltd company which is subsidiary of a us based public company, has to pay remuneration to its director who is a non resident. payment is asked to pay through invoice raised by sister concern company of holding company in usa itself for service of the director per hour at indian company since director is also employee of that sister concern in usa.whether this can be possible to do so?

i know there is lot of issue for various law but please focus some light on this issue..............

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7 Replies

Tanveer Md Masood (Indispensable) (361 Points)
Replied 19 September 2012

DEAR VIJAY,

REMUNERATION OF DIRECTOR IS GENERALLY FIXED BY THE REMUNERATION COMMITTEE WHICH IS A NON -MANDATORY COMMITTEE SET UP UNDER CLAUSE 47 OF THE LISTING AGREEMENT . THIS COMMITTEE IS GENERALLY SET UP TO DECIDE THE REMUNERATION PAYABLE TO DIRECTORS AND ISSUE OF SHARES UNDER ESOP/ESPS SCHEME.

AS FAR AS PAYMENT OF REMUNERATION ON HOURLY BASIS IS UNHEARD OF AND IT DEPENDS ON THE REMUNERATION COMMITTEE OF THE COMPANY TO DECIDE .

REGARDS...

TANVEER MD MASOOD

CALCUTTA.

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CS Ankur Srivastava (Company Secretary & Compliance Officer) (17853 Points)
Replied 19 September 2012

It is a private company therefore the provisions of remuneration does not apply on it, it can pay whatever the Board may decide.

Being subsidiary of foreign public company, it will not be treated as public company. Had it been the subsidiary of indian public company, the provisions of remunerations as are applicable to public companies will apply over it.

vijay (CA) (158 Points)
Replied 19 September 2012

thank sir but what if it would be an public company which is subsidiary of a foriegn public company?does transfer pricing issues arise on this kind of payment to director through invoice raised by the sister concern? i know now question is getting complex.......

CS Ankur Srivastava (Company Secretary & Compliance Officer) (17853 Points)
Replied 20 September 2012

IN case of public companies the provisions of remuneration 198, 309, 310 and Schedule XIII would apply and you have to pay within the limits after due sanctions.

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