CS Arjun Rajagopal
(B.com, ACS)
(1056 Points)
Replied 14 November 2016
Yes, Independent director is also considered as related party. Independent Directors are entitled only to payment of sitting fees for attending board/committee meetings and reimbursement of expenses for attending board/committee meetings. Payment of sitting fees to such a director is not considered as related party transaction.
Anu K S
(Cleared CA Final)
(195 Points)
Replied 14 November 2016
Anu K S
(Cleared CA Final)
(195 Points)
Replied 14 November 2016
CS Arjun Rajagopal
(B.com, ACS)
(1056 Points)
Replied 15 November 2016
Section 149(9) of the Companies Act, 2013 says that an ID shall not be entitled to any stock option, but may receive remuneration by way of fee provided under Section 197(5) ie sitting fees for attending board/committee meetings, reimbursement of expenses for participation in board and other meetings and profit related commission as may be approved by members.
Also, payment of sitting fees to ID doesn't fall in the category of RPT items mentioned in Section 188(1). Therefore, it can be concluded that payment of sitting fees to ID is not considered as RPT.
Hope, the provision is clear to you.
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