Company A (Public Company) is appointing relative of managing director as a whole time director at a remuneration of 3 lacs. Whether central govt approval is required for such appointment. Whether 314(1) or 314(1B) will apply.
Pankaj Sachar (CA Practice ) (44 Points)
22 June 2009Company A (Public Company) is appointing relative of managing director as a whole time director at a remuneration of 3 lacs. Whether central govt approval is required for such appointment. Whether 314(1) or 314(1B) will apply.
Ajay Mishra
(Company Secretary)
(74337 Points)
Replied 22 June 2009
Dear Pankaj
Can u clarifify that the proposed appointee drae a remuneration of Rs. 3,00,000 p.a. or p.m. ?
Regards
Priyanka
(CS)
(141 Points)
Replied 22 June 2009
In case of the Appointment of Whole time Director, Section 314 would not apply. However, if the remuneration exceeds the limits beyond the ones, that is prescribed , I think, C G Approval wuld be required.
CS Ankur Srivastava
(Company Secretary & Compliance Officer)
(17853 Points)
Replied 22 June 2009
Dear Pankaj,
If remuneration exceed Rs. 50,000/- P.m., it would require the approval of Central Government otherwise not.
Pankaj Sachar
(CA Practice )
(44 Points)
Replied 22 June 2009
| Originally posted by :Ankur Srivastava | ||
| " |
Dear Pankaj, Dear All After carefull study I have understood that the provisions of sub-section (1) and sub-section (1B) of 314 are totally inapplicable to the appointment of a person as a managing director or whole -time director, unless the managing/whole-time director concerned is paid any remuneration for any other office or for any services, apart from the services as managing/ whole-time director, since the office of managing/whole-time director is not an office or place of profit within the meaning of sub section (3) of section 314 apart from the fact the office of managing director stands expressly excluded for the purposes of sub-section (1). No Central Government approval under section 314 need to be taken for paying remuneration to the managing as well as whole time director of the company, when the person holding any of these offices happens to be a relative of a director.
Please refer the attachment and then provide me ur thoughts as well.
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Priyanka
(CS)
(141 Points)
Replied 22 June 2009
| Originally posted by :Ankur Srivastava | ||
| " |
Dear Pankaj, Dear All After carefull study I have understood that the provisions of sub-section (1) and sub-section (1B) of 314 are totally inapplicable to the appointment of a person as a managing director or whole -time director, unless the managing/whole-time director concerned is paid any remuneration for any other office or for any services, apart from the services as managing/ whole-time director, since the office of managing/whole-time director is not an office or place of profit within the meaning of sub section (3) of section 314 apart from the fact the office of managing director stands expressly excluded for the purposes of sub-section (1). No Central Government approval under section 314 need to be taken for paying remuneration to the managing as well as whole time director of the company, when the person holding any of these offices happens to be a relative of a director.
Please refer the attachment and then provide me ur thoughts as well.
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Well i feel, he is absolutely right. Sec 314 is not applicable at all in this case.
Priyanka
CS Ankur Srivastava
(Company Secretary & Compliance Officer)
(17853 Points)
Replied 22 June 2009
Dear Pankaj and Priyanka,
Section 314 does not apply in case of the appointment of MD or Manager. And to be very frank with you i am not satisfied with your views. Thus, section 314 will apply in this case.
Please explain your view.
Pankaj Sachar
(CA Practice )
(44 Points)
Replied 22 June 2009
| Originally posted by :Ankur Srivastava | ||
| " |
Dear Pankaj and Priyanka, I request you to read the attachment provided along iwth my view.
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Pankaj Sachar
(CA Practice )
(44 Points)
Replied 22 June 2009
| Originally posted by :Ankur Srivastava | ||
| " |
Dear Pankaj and Priyanka, I request you to read the attachment provided along iwth my view.
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Pavan Jain S
(Chartered Accountant)
(1575 Points)
Replied 23 June 2009
The provisions of sec 314 are applicable only if the proposed appointee holds a office or a place of profit. IF the appointee is a director, he is deemed to have held a office or a place of profit only if he derives a remuneration in excess of the limit specified in section 198, 269 & 309 r.w. sch XIII. Thus, if the WTD is getting a remuneration which he is entitled to as per the provisions of Act, section 314 do not apply. In other cases, he is required to obtain the approval of CG under those respective sections which is enough for the purposes of section 314
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