Companies Act, 1956

Section - 318 - Compensation for loss of office not permissible except to managing or whole-time directors or to directors who are managers

Compensation for loss of office

Compensation for loss of office not permissible except to managing or whole-time directors or to directors who are managers.

318. (1) Payment may be made by a company, except in the cases specified in sub-section (3) and subject to the limit specified in sub-section (4), to a managing director, or a director holding the office of manager or in the whole-time employment of the company, by way of compensation for loss of office, or as consideration for retirement from office, or in connection with such loss or retirement.

(2) No such payment shall be made by the company to any other director.

(3) No payment shall be made to a managing or other director in pursuance of sub-section (1), in the following cases, namely :—

         (a)  where the director resigns his office in view of the reconstruction of the company, or of its amalgamation with any other body corporate or bodies corporate, and is appointed as the managing director, [***] [***] manager or other officer of the reconstructed company or of the body corporate resulting from the amalgamation ;

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