Deposit of rs. 500 from retiring director

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Querist : Anonymous

Querist : Anonymous (Querist)

14 September 2012 Sir, is it wrong or invalid if the company is in practice of collecting Rs. 500 from the retiring directors of the company.

Though company law does not prescribe deposit of 500 for retiring directors, but hw should the matter be handled if the company follows it?

pl advise

Amol S Joglekar

Amol S Joglekar (Expert)

14 September 2012 What is it meant for? donation.... gift.... retiring charges... what is the purpose? Please throw some light on it.

Querist : Anonymous

Querist : Anonymous (Querist)

14 September 2012 for reappointment in AGM, Sir

Querist : Anonymous

Querist : Anonymous (Querist)

15 September 2012 need an urgent advice, Sir. thanks

Kumar Gaurav

Kumar Gaurav (Expert)

15 September 2012 Refer Section 257, 257(1) Clearly starts with A person who is not a retiring director shall.........., means retiring director are excluded from the purview of Section 257.

Querist : Anonymous

Querist : Anonymous (Querist)

15 September 2012 i completely understand sir. But company has beenn following the same since last 2 - 3years. I cannot rectify past records, but in case company demanded deposit this year, will it be illegal?

Amol S Joglekar

Amol S Joglekar (Expert)

15 September 2012 The intent of the ACT is very clear. Now as I said, you need to change the very purpose of accepting inr500/-

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Kumar Gaurav

Kumar Gaurav (Expert)

15 September 2012 Here the money received is not as per Companies Act, so cannot be maintainable and its not that any mistake done in past be repeated, close this practice. There is nothing wrong. Companies Act has nowhere mentioned to follow custom. Close this practice from this year there will be no illeffect on the Company.

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