Directors remuneration in form of Professional fee

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This discussion addresses whether directors of a private limited company can receive consultancy fees instead of salary. While there are generally no direct restrictions on such payments for private limited companies, it's crucial to recognise this as a related party transaction. You'll need to ensure compliance with Section 188 of the Companies Act, which may require passing a specific resolution.

CHANDAN L

CHANDAN L (Querist)
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08 April 2020 I have a private limited company, wherein there are 2 directors who are even shareholders for the same. They are not receiving any remuneration by way salary for the year. At the end of financial year, they are willing to charge consultancy fee for the period.
share capital being 1 lakh and consultancy fee being 10lk
Can you help me out if any restrictions are there on payment of consultancy charges.
Is any resolution required to be passed for the same.?
If yes, under which section it is applicable?