Director

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

10 September 2013 1. In ABC Pvt. Ltd., if a person, who is son of Managing Director is to be appointed as Executive Director on following different situations :
1. on remuneration not exceeding 50,000
2. on remnueration exceeding 50,000.

What will be the procedure for the above situations?

2. If that son is already appointed as Director but now to be designated as Executive Director with remuneration of Rs. 1,00,000. What will be its procedure?
Thanks.

Ajay Mishra

Ajay Mishra (Expert)
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10 September 2013 Hi

As per section 314(3), a director is said to be holding 'Office or Place of Profit' in a company, if he obtains from the company in addition to the remuneration to which he is entitled as a director any salary, fees, commission or any other perquisites while holding the office of a director.
An individual other than a director or any firm, private company or body corporate is said to be holding office or place of profit in a company, if they obtain from the company, by way of remuneration, any salary, fees, commission or any other perquisites while holding the office or place of profit in the company.

Your son is not holding any office of place of profit, he only hold the position of director as executive director, so the provision f section 314 is not apply.

Ajay Mishra

Ajay Mishra (Expert)
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10 September 2013 As per section 314 certain persons cannot be appointed or allow to hold an office or place of profit in the company unless, they comply with the requirement of the provisions of this section. If any person is proposed to hold such office or place of profit in the company then company has to take consent of the shareholders by passing special resolution in the general meeting of the company.

The DCA has given clarification vide Circular No. 14 of 1975, dated 5-6-1975 to clarify various doubts on the scope of the provisions of section 314(1B) of Companies Act, 1956, as under:—
Section 314 of the Companies Act, 1956, applies to public as well as private companies. Sub-section (1) of this section provides that no director of the company and no partner or relative of such director shall hold any office or place of profit, except, that of managing director or manager, banker or trustee for the holders of debentures of the company, carrying a total monthly remuneration of Rs. 10000 or more, under the company unless a special resolution according the consent of the company is passed at the general meeting of the company held for the first time after the holding of such office or place of profit.

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Querist : Anonymous

Querist : Anonymous (Querist)

10 September 2013 Thanks sir for your reply.

so in my both queries this section 314 does not become applicable.

This amount of rs. 10,000 has been amended to Rs. 50,000 as per Companies (Central Government's) General Rules and Forms (Amendment) Rules, 2011.

Thanks.

Ajay Mishra

Ajay Mishra (Expert)
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10 September 2013 Rs. 50000 is for section 314(1B) and now it is also changed and it is goes upto Rs. 250000/-

For Section 314(1) it is Rs. 10000.

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