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Office or Place of Profit u/s 314 (1B)

Nikhil Kalra (CS Final Student) (85 Points)

20 April 2010

Can anyone send me the specimen resolution passed for approving the appointment to the office or place of profit and remuneration of the relative of the directors u/s 314 (1B) read with relevant rule by

1 selection Committee

2 Board Of Directors

3 Special Resolution along with explanotory statement

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6 Replies

Ankur Garg (Company Secretary and Compliance Officer) (114773 Points)
Replied 20 April 2010

Find below the resolution and modify the same accordingly:

Board resolution for appointment of relative of director under section 314(1B)

RESOLVED THAT pursuant to section 314(1B) read with the Director's Relatives (Office or Place of Profit) Rules, 2003 and other applicable provisions of Companies Act, 1956, if any, and subject to the approval of the members of the Company in the General Meeting and the Central Government, and upon the approval of the Selection Committee of the Company to appoint Mr. Dashrath Maheshwari as the Chief Operating Officer of the Company on the terms and conditions as placed before the Board and duly initialed by the Chairman for the purpose of identification, w.e.f. 1st April,, 2010.”

Selection committee resolution under section 314(1B)

RESOLVED THAT pursuant to the provisions of section 314(1B) of the Companies Act, 1956 read with Director's Relatives (Office or Place of Profit) Rules, 2003 approval of the Selection Committee be and is hereby accorded for the appointment of Mr. Dashrath Maheshwari as the Chief Operating Officer of the Company w.e.f. 1-4-2010 on the salary, allowances and perquisites as under:

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RESOLVED FURTHER THAT the Board of Directors of the Company be and is hereby empowered to sanction/withhold at their discretion annual increments due to Mr. Dashrath Maheshwari as it may consider in the best interest of the Company from time to time.

RESOLVED FURTHER THAT the remuneration payable to Mr. Dashrath Maheshwari as aforesaid shall be subject to such modification as the Central Government may suggest or require which the directors are hereby authorized to accept on behalf of the Company and which may be acceptable to Mr. Dashrath Maheshwari.

RESOLVED FURTHER THAT Mr. Dashrath Maheshwari shall be in the exclusive employment of the Company and will not hold a place of profit in any other Company during the period of his tenure.

RESOLVED FURTHER THAT the Chairman of the Committee be and is hereby authorised to submit the proceedings of the Committee to the Board of Directors for consideration and further needful.

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Ankur Garg (Company Secretary and Compliance Officer) (114773 Points)
Replied 20 April 2010

Sample of General Meeting Resolutions under section 314(1)/(1B)

RESOLVED THAT pursuant to the provisions of section 314(1B) of the Companies Act, 1956 read with Director's Relatives (Office or Place of Profit) Rules, 2003 and subject to the approval of the Central Government, the Company hereby give consent for the appointment of Mr. Dashrath Maheshwari, a relative of a director of the Company as the Chief Operating Officer of the Company w.e.f. 1-4-2010 on the salary, allowances and perquisites as under:

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RESOLVED FURTHER THAT the Board of Directors of the Company be and is hereby empowered to sanction at their discretion increments to Mr. Dashrath Maheshwari and the Board be and is hereby further empowered to withhold the annual increment as it may consider in the best interest of the Company from time to time.

RESOLVED FURTHER THAT Mr. Dashrath Maheshwari shall be in the exclusive employment of the Company and will not hold a place of profit in any other Company during the period of his tenure.

RESOLVED FURTHER THAT Shri Vivek Jain, the Managing Director of the Company be and is hereby authorized to submit an application to the Central Government alongwith all the necessary enclosures and give any statement, declaration, undertaking and do all such acts, deeds and things as are necessary to give effect to the aforesaid resolution.

Explanatory Statement

Looking into the expansion of the business activities of the Company, the Board of Directors at their meeting held on _______ has considered that the Company should appoint a qualified dynamic officer for discharging the duties of financial officer in the Company. The Board proposed the name of Mr. Dashrath Maheshwari, son of _______, the Executive Director of the Company for appointment as the Chief Operating Officer w.e.f. 1-4-2010.

The Board considered that Mr. Dashrath Maheshwari, aged 36 years is a qualified Chartered Accountant, having practical experience of more than four years in financial field. He has worked with ____________ as an Associate from ____________at a salary of __________ Further, he has worked with ______ as _______ from ________ at a salary of Rs.______Lacs p.a.

The Board considers that looking into his dynamic education background and his experience will strengthen the management in controlling financial activities of the Company in more proper manner.

He shall be the Chief Operating Officer of the Company and will be responsible for all the financial affairs of the Company, risk management, internal audits, reporting to members and maintaining communication with bankers of the Company.

The Selection Committee of the Independent Directors approved the proposed appointment of Mr. Dashrath Maheshwari at their meeting held on __________.

In terms of the provisions of section 314(1B) of the Companies Act, 1956 read with Director's Relatives (Office or Place of Profit) Rules, 2003, the appointment of relative of Director of the Company on a remuneration exceeding Rs. 50,000 p.m. requires the approval of the members by way of special resolution and the Central Government. Accordingly, the resolution mentioned in Item No. 1 of the notice is being proposed for approval accordingly.

Except, ________, being the relative of the proposed appointee, none of the Directors of the Company is concerned or interested in the above said resolution.