28th June 2011
Preamble of the Issue
Mr.X is a Director of the Company XYZ Private Limited
Mr.Y is a relative of Mr.X
Mr.Y who is a relative of Mr.X (Director of the Company) is being engaged as a consultant on a monthly payment of Rs.50000/-. The provisions of Section 314(1B) is attracted for the above said appointment of Mr.Y as consultant. In my opinion this requires the following approval:
(1) Board of Directors prior approval.
(2) PRIOR approval of the Members of the Company by way of Special Resolution [Section 314(1B)]
(Note : Central Govt. approval is not required since the payment does not cross Rs.50000/-)
My interpretation of Section 314 is as follows:
(1) Monthly Remuneration upto Rs.9,999/- Prior Board approval
(2) Monthly Remuneration from Rs.10,000/- to Rs.19,999/- Prior Board Approval and Members approval at the next General Meeting
(3) Monthly Remuneration from Rs.20,000/- to Rs.50,000/- Prior approval of the Board and Prior approval of the Members
(4) Monthly Remuneration over and above Rs.50,000 - Prior approval of Board, Prior approval of the Members and Central Government.
The above appointment falls under Point No.3 of my interpretation. Kindly advise in this regard.
with regards
Murali
CAclubindia
