Consultancy fees to chairman

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Law Aspire (Querist)

30 March 2012 In a Public unlisted company , at present a person is a Chairman cum Managing Director (CMD)and getting managerial remuneration. Now we want to change him to Chairman cum Chief Consultant(Finance) i.e Keeping him as a normal director and not retaining him as a MD and want to pay him remuneration as a Fees in Professional Capacity and not by way of managerial remuneration to him . Can we do So. Is there any restriction in Company Law restricting payment of Professional(Consultancy) Fees to a person appointed as Chairman of the Company.

Ajay Mishra

Ajay Mishra (Expert)

30 March 2012 Hi

Yes you can do so, by calling a Board meeting and in BM change the designation of MD and file Form-32 with ROC for the change in position as director. After change you also required to appoint any other director as MD also.
In case of remuneration, you will call a general meeting for amending terms and condition of appointment and remuneration to directors of the company.

If director of the company get any thing in addition to director remuneration, it will also cover office and place of profit under section 314 of the Companies Act, 1956.

Regards

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