In a public company, managing director is a salaried employee [like in a hospital MD is a consulting doctor] and he is drawing salary in addition to MD's remuneration, whether approval of Central Government is required in this situation?
Pradeep (CA) (54 Points)
30 December 2009In a public company, managing director is a salaried employee [like in a hospital MD is a consulting doctor] and he is drawing salary in addition to MD's remuneration, whether approval of Central Government is required in this situation?
Ankur Garg
(Company Secretary and Compliance Officer)
(114773 Points)
Replied 30 December 2009
Hi,
I would like to draw your kind attention towards proviso to Section 309(1) which reads as follows:
“Provided that any remuneration for services rendered by any such director in any other capacity shall not be so included if –
(a) the services rendered are of a professional nature, and
(b) in the opinion of the Central Government, the director possesses the requisite qualifications for the practice of, the profession.”
Thus on the basis of above provision and in your case such payment to MD shall not be treated as remuneration to director if and only if such the 2 conditions mentioned above fulfill simultaneously.
In proviso to Section 309(1) above you have to file application to CG in order to obtain CG approval.
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