Appointment of Director's relative as Sr executive

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R P Murari (Querist)
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09 March 2010 Dear Sir/Madam,

Are there any restrictions in appointing a close relative of an existing Director ,in a Private Limited Company, as a senior executive.

The major stake holder is a listed company in Singapore, I understand that the rules of a Public Limitied Company appies in certain cases - does the appoint ment of Sr Executive fall in this catagory?

If it does, what are the approvals to be got?

R P Murari

r_p_murari @ yahoo.com

CMA. CS. Sanjay Gupta

CMA. CS. Sanjay Gupta (Expert)
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09 March 2010 YES. HE CAN BE APPOINTED. NO APPROVAL REQUIRED BUT YOU HAVE TO REMUNERATE HIM BY WAY OF SALARY AS JUST ANOTHER EMPLOYEE AND DEDUCT TDS IF REQUIRED.

R P Murari

R P Murari (Querist)
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10 March 2010 Dear Sanjay,
Thank you for the advice.

How ever I have a speciifc question -
I understand that if the major stake holder in the Indian Pvt Ltd company is a foreign listed company, some of the rules applicable for an Indian Public limited company applies. Specifically, does the appontment of a 'relative' fall under this?
Regards,
Murari

CS REMESH B

CS REMESH B (Expert)
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15 March 2010 For appointing a relative of a director please comply with the provisions of Section 314 of the Companies Act, 1956. You have not mentioned the salary of the person being appointed. Because in some cases special resolution is required and in some cases approval of central govt. is also required. Pl go through the Section 314 of Companies Act, 1956. I do not think that the rule applicable for an Indian Public ltd co. applies to the pvt co. in which holding co is a foreign co. I think the holding co. must also be an Indian co. (i.e. registered as per Companies Act, 1956)

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