Appointment & remuneration of director of pvt co

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saurav singhania (Querist)
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25 February 2013 Respected experts,

Kindly guide us the following:

1. one of our pvt ltd co was appointed a Director as Non-executive, now the company wants to give him the remeneration as Director.
whether we should required to file form-32 to change his position from non-executive to executive?if not, then what procedure to be followed for hid remuneration?

2. Also, the company wants to appoint his son as wtd. in such case whether we need to apply sec 314 of the co's act. if yes, then in what manner.

looking forward for your expert advive.

Ajay Mishra

Ajay Mishra (Expert)
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25 February 2013 Hi

The provision of remuneration to directors of the Companies Act, 1956 is not applicable to private limited company, it will govern by your company's articles of association.

Change from non-executive to executive of director is not the change in position of director, so no need to file Form-32. Only pass a Board Resolution and make entry in minuted.

Ajay Mishra

Ajay Mishra (Expert)
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25 February 2013
Yes, Section 314 will apply on Private Limited Company.

As per section 314(1) certain persons as given below cannot hold office or place of profit carrying the remuneration of Rs. 10,000 p.m. or more in the company, unless a special resolution to that effect has been passed in the general meeting of the company:—
1. Any partner of the firm in which director of the company is also a partner;
2. Any relative of a director of the company;
3. Any firm in which a director or his relatives or both are partner;
4. Any private company in which director of the company is holding office of director or member;
5. Any director/manager of a private company in which director of the company is holding office of director or member.
For computing the limit of Rs. 10,000 per month, bonus, leave encashment, reimbursement of medical expenses, etc., which are not events of monthly regularity or occurrence cannot be taken into account.
Where relative of any director or any of the person mentioned above is or appointed to an office or place of profit without the knowledge of director of the company, such appointment shall require the approval of the members in the general meeting by way of special resolution within 3 months of the date of appointment.

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