Priya Sharma (Company Secretary & Student.MBA) (998 Points)
16 November 2009One of the director of a Public Company is a relative of the already existing director........And the former director is receiving royalty from the Company, for using her trademark.
So in this case is section 314 applicable?/
Plz suggest
Its urgent
Rgda
Priya
Ankur Garg
(Company Secretary and Compliance Officer)
(114773 Points)
Replied 16 November 2009
In your case none of the director is holding office or place of profit read with section 314(3).
First director is not on office or place of profit because he is not drawing anything over and above the remuneration to which he is entitled as such.
As the first director himself is out of the definition of office or place of profit hence, no question arises about the applicability of office or place of profit on second director (relative).
Priya Sharma
(Company Secretary & Student.MBA)
(998 Points)
Replied 16 November 2009
But Ankur Sir Since the director is getting royalty for her trademark being used....will it not fall under definition office or place of profit??
Rgds
Priya Sharma
CS final Student
Ankur Garg
(Company Secretary and Compliance Officer)
(114773 Points)
Replied 16 November 2009
Let me give you a simple example to understand what is office or place of profit.
Suppose you Ms. Priya Sharma director of a company and drawing Rs. 12,000 as remuneration in the capacity of director. Here you are simply drawing remuneration as director and not drawing anything over and above Rs. 12, 000.
Now if you draw anything over and above Rs. 12,000 in any capacity then you must be considered on office or place of profit and section 314 will be applicable on you and your relative etc.
In other words now if you are drawing Rs. 12,000 only and your relative is drawing Rs. 100000 p.m. then also section 314 is not applicable and there is no need to worry.
Revert if there is any doubt.
Rakesh Bansal
(CA)
(75 Points)
Replied 16 November 2009
hiii priya... iam totally agree with mr. ankur...
as per explaination attached to sec 314 place of profit is defined as if any director is getting over and above the remuneration in his capacity as director... even a single Rs. in the co. or any of its subsidery co.
as regarding ur case no director is covered u/s 314
Alok D. Mishra
(Company Secretary Manager -Legal)
(93 Points)
Replied 17 November 2009
Dear Priya
even i agree with Ankur Sir
Vipul Garg
(Company Secretary)
(60 Points)
Replied 11 June 2011
Dear Ankur ji
Pls tell me one thing if the Managing Director of the public company is drawing salary 150000 per month and not drawing anything else from the company and he wants to appoint his 6 relatives in the company on different posts (salary 70000 per month)
.. then pls tell me in that case whether 314(1B) will attract or not..
thanks in advance
vipul
CS Ankur Srivastava
(Company Secretary & Compliance Officer)
(17853 Points)
Replied 11 June 2011
Dear Vipul Ji,
Yes section 314(1)(B) will be attracted.
You have to pass Prior Special Resolution for the appointment.
Vipul Garg
(Company Secretary)
(60 Points)
Replied 01 August 2011
But Ankur ji
As Mr. Ankur Garg has given the example of Rs. 12000 then in my case the section should not attract.. pls clarify me and please give me the justification of your above answer.
Further One of the doctor was giving services as a technical consultant in the company and he draws bill on the company for his services.
Now he has become the director in the company , will the section 314(1) will apply in that case...
Pls reply as soon as possible..
thanks
vipul
CAclubindia
