Vishal (business) (78 Points)
10 October 2011Dear All
A Pvt Ltd co wants to sign a retainership contract with a Director not drawing any salary at present for availing his professional services. Kindly let us know this will fall under sec 314 and the formalities to be complied with .
Further the applicability of sec 297 and formalities
thanks
VK
AMIT MISHRA
(Legal Professional)
(393 Points)
Replied 10 October 2011
Hi Vishal,
Yes Section 314 will be applicable in this case if :
1. The Director recieves salary or remuneration for services rendered other than his capacity as director
2. The services rendered are continious in nature and the remuneration recieved is periodical and not case to case basis.
3. The services rendered are not professional services.
if he acquires such office of profit then Section 297 will also be applicable.
Thanks & Regards
Amit Mishra
BSamrish & Co.
New Delhi
Vishal
(business)
(78 Points)
Replied 11 October 2011
Dear Amit
Thank you so much for your reply
but would like to state that the Director will be rendering consultancy services for advertising business and monthly retainer fee will be around Rs 1 lacs - will this amount to professional service or not ,
pl also let me know formalities under companies act u/s 314 and sec 297
regards
VK
AMIT MISHRA
(Legal Professional)
(393 Points)
Replied 11 October 2011
Hi Vishal,
In your case:
1.Board resolution u/s 314 is required and
2.a resolution u/s 314 of the Companies Act 1956 in the General meeting within 3 moths of appointment
Since the remuneration is less than the new prescribed limit of Rs. 2,50,000/- per month.
Thanks & Regards
Amit Mishra
BSamrish & Co.
New Delhi
AMIT MISHRA
(Legal Professional)
(393 Points)
Replied 11 October 2011
also.......being a related party transaction consent u/s 297 from the Central Government is required if the paid up capital is 1 cr or more. Consent to be obtained in Form 24A
CS Ankur Srivastava
(Company Secretary & Compliance Officer)
(17853 Points)
Replied 11 October 2011
Yes, this will come under the ambit of section 314
"Any office or place shall be deemed to be an office or place of profit, if the director holding it obtains from the company anything by way of remuneration over and above the remuneration to which he is entitled as such director, whether as salary, fees, commission, perquisites, the right to occupy free of rent any premises as a place of residence or otherwise."
As such, this is within the new limits of Rs. 2.5 lacs, you have to obtain only approval of shareholders by way of special resolution.
Vishal
(business)
(78 Points)
Replied 12 October 2011
Dear All
As the appointment is of Director who is not drwing any remuneration for directorship, need clarification
If Members approval to be taken within 3 months by holding EGM or it can be taken in the 1st General Meeting after his appointment.
Also pl clear the doubt - the limit of Rs 2.5 is applicable for the Relatives of Director occupying the place of profit or also for any Director himself occupying the place of profit
thanks and regards
VK
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