Commission to relative of a director

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

14 April 2011 Ours is a unlisted public limited Company. We are paying Rs. 60000 p.m. to wife of a non executive director. Kindly let me know what are the compliances to be followed in this regard and what are the forms to be filed? whether it will be counted for limits u/s 198?

udit sharma

udit sharma (Expert)
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14 April 2011 This is a case of relative of a Director holding office or place of profit in the Company and hence you will have to comply with the provisions of Section 314(1B) of the Companies Act, 1956.

God Bless

CS Udit Sharma

Querist : Anonymous

Querist : Anonymous (Querist)

14 April 2011 Can you tell me the detailed procedure?

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Pravin Gupta CS

Pravin Gupta CS (Expert)
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15 April 2011 As per existing requirment before 06th april 2011 if commission or remunration paid to any relative of director is more than Rs. 50000/- than it shall required previous approval of Central govt. and specila resolution passed by shareholder.

Now notification issued by MCA dated 06.04.2011 , this limit of Rs. 50000/- is enhance to rs. 250000/- . so if any remunration paid to relative of director if less than Rs.250000/- than not require any approval of central govt.

However A special resoltution u/s 314(1A): a special resolution require if remunration payble to such relative is more than rs. 10000/-

So follow to pass a Special resolution only.