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Section 314 relative of directors hold pffice or place of pr

hinal (Trainee) (27 Points)

17 December 2009

HI,

one of my Clients is Private Company. Before April 2007 they were six Directors(Husband-wife) from which wife of 3 directors resign from April 2007 and employing over there and getting remuneration of Rs. 50000. after 2months their remuneration has increased to Rs. 75000 and in 2008 to Rs. 85000. They have not taken approval by special resolution or not taken approval of Central Government inspite of remuneration exceeds Rs. 10000 or Rs. 50000 respectively.

So my question is what should i recommend to them to get out from this contravention?

Plz. repl Urgently

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6 Replies

Ankur Garg (Company Secretary and Compliance Officer) (114773 Points)
Replied 17 December 2009

Hello,

No contravention at all as long as the directors are not drawing anything over and above the remuneration to which they are entitled as such in accordance with section 314(3).

Regards

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hinal (Trainee) (27 Points)
Replied 17 December 2009

Thank you Mr. Ankur

but my question is relative of directors. they are no more directors of the Company and drawing salary as relative of Directors. so nw what will your answer about this?

Ankur Garg (Company Secretary and Compliance Officer) (114773 Points)
Replied 17 December 2009

Same answer. Kindly go through the link below:

/forum/message_display.asp?group_id=57976

Thanks

varun sharma ( CA Final , M.Com) (87 Points)
Replied 17 December 2009

Thanks Ankur sir for ur valuable comments.........

Ranjith (Article) (37 Points)
Replied 18 December 2009

hmmm...not so sure abt the above said answer...correct me if i'm wrong...

I think your still missing the point that Ms Y resigns and is no longer a director and hence Sec 314 (3)b is very much applicable she being an individual other than a director. Sec 314 (3)a only applies to directors.

Quoting the Sec 314 (1)(b) to it, it definitely becomes mandatory to file 24B and pass a special resolution being a relative of a director earning more than 50000.

Ranjith

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Vaibhav Shukla (Company Secretary) (142 Points)
Replied 19 December 2009

I completely agree with Mr. Ranjith as the wives of the three directors have resigned from the directorship but they continue to draw remuneration from the company. Section 314 (1)(b) is applicable here the special resolution needs to be passed in this regard also the approval of central government should be taken.