Draft of resolution

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KETAN MEHTA (Querist)
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21 March 2011 To
Dear Experts ,
I have drafted following resolution. Is it correct or is it contradictory for section 198 & 309 of Co. Act. Pl advice.

"Be and is hereby resolved that the consent of the members be and is hereby accorded to pay Mr. x the remuneration of Rs. 3 Lakhs per month w.e.f. April 2011 during the terms of his office and the same also be paid as minimum remuneration in the event of inadequacy or absence of profits in any financial year, during her term of office

RESOLVED FURTHER THAT the aggregate of the salary as payment of remuneration to Mr.x, Director, shall be subject to the overall ceilings laid down under Sections 198 and 309 of the Companies Act, 1956 and other applicable provisions of the said Act”.

“RESOLVED FURTHER THAT the Board of Directors of the Company be and are hereby authorised to take all such steps as may be necessary, proper or expedient to give effect to this resolution.”

KETAN MEHTA

KETAN MEHTA (Querist)
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25 March 2011 Pl advice experts

Aashok Kumar Sharma online

Aashok Kumar Sharma online

(Expert)
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21 July 2024 Your resolution appears to be addressing the remuneration of Mr. X, a director, and ensuring compliance with the provisions of the Companies Act, 1956. However, there are a few points that need clarification and adjustment for clarity and alignment with legal requirements:

### Proposed Resolution:

"RESOLVED THAT pursuant to the provisions of Sections 198 and 309 of the Companies Act, 1956, and other applicable provisions, consent of the members be and is hereby accorded to pay Mr. X, Director, a remuneration of Rs. 3 Lakhs per month w.e.f. April 2011, during his term of office.

FURTHER RESOLVED THAT in the event of inadequacy or absence of profits in any financial year, the remuneration to Mr. X shall be paid as minimum remuneration during his term of office, subject to the overall ceilings prescribed under the said Sections and other applicable provisions of the Companies Act, 1956.

FURTHER RESOLVED THAT the Board of Directors of the Company be and is hereby authorized to take all such steps as may be necessary, proper, or expedient to give effect to this resolution."

### Clarifications and Adjustments:

1. **Clarity on Minimum Remuneration:** Ensure that the term "minimum remuneration" is defined or clarified within the context of the Company's Articles of Association and within legal provisions. This is to ensure compliance with Section 198, which specifies limits on managerial remuneration based on profits.

2. **Compliance with Section 309:** Section 309 of the Companies Act, 1956, deals with payments to directors for loss of office and remuneration for services rendered beyond normal duties. Ensure that the resolution aligns with the provisions of this section, especially regarding the overall limits on managerial remuneration.

3. **Board Authorization:** The resolution correctly authorizes the Board of Directors to take necessary steps. This authorization is crucial for the implementation and administration of the approved remuneration structure.

### Conclusion:

To ensure compliance and clarity:
- Review the Company's Articles of Association and ensure that the terms used in the resolution align with its provisions.
- Seek legal advice to verify the adequacy and compliance of the resolution with Sections 198 and 309 of the Companies Act, 1956.
- Ensure that all terms, including the concept of "minimum remuneration," are clearly defined and understood within the context of the resolution and legal framework.

By making these adjustments, your resolution will be clearer and better aligned with the legal requirements under the Companies Act, 1956, regarding director remuneration.

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