RAHUL MAHAJAN (CA) (166 Points)
12 September 2013Hi..
I am being appointed as Non Executive Director in private limited company having paid up capital more than 1 crore.
Could you please tell me if the company would require approval from CG if I get monthly remuneration of Rs.50000 under section 297. If yes, please tell me any other way to get remuneration.
Thank You.
Best Regards,
CA Rahul Mahajan
meenakshi
(Audit Manager)
(81 Points)
Replied 12 September 2013
Mr. Rahul Mahajan,
No CG approval is required to be obtained by your company bcoz of the following reasons:
1. Payment of remuneration is not covered under section 297
2. Sections 198, 309, 387 and schedule xiii relating to managerial remuneration is not applicable for Private Limited Companies.
So you can receive the remuneration of Rs 50000 without any approval from CG.
RAHUL MAHAJAN
(CA)
(166 Points)
Replied 12 September 2013
Dear Meenakshi,
Thanks for prompt response.
This is to inform you that CS of the company was saying that I am receiving remuneration against consultancy service provided by me as I am Chartered Accountant.
Services included under Section 297 that's why CG approval is required.
Kindly give some reference of decided case law or any further explanation.
meenakshi
(Audit Manager)
(81 Points)
Replied 13 September 2013
Mr. Rahul Mahajan,
Section 297 applies only to specified contracts which are sale, purchase or supply of goods, materials or services and/or contract for underwriting of subscripttion of shares/ debentures.
The said section is not applicable for transactions relating to immovable property, employment contract and contract for rendering professional services.
hence section 297 is not at all attracted in your case and the need for CG approval does not arise.
CAclubindia
