Payment to Director

Save Share

This query is : Resolved

CA.Vishal Kumar (Querist)

02 October 2009 Is any payment made to directors of a private company apart from remuneration will attract Section 314 of the companies Act 1956. If yes, what is the limit till which payment can be made. If the remuneration is zero then what will be the consequences.

Ankur Garg

Ankur Garg (Expert)

03 October 2009 Hi,

If you made any payment to director over and above the remuneration to which he is entitled as director then section 314 is applicable.

For amount more then 10000 you have to obtain shareholders approval u/s 314(1).
If payment is more then 20000 then prior approval of shareholders is required u/s 314(1B).

where payment is more then 50000 prior approval of share holder and central govt. approval is required.

Regards

CA.Vishal Kumar

CA.Vishal Kumar (Querist)

03 October 2009 Thanks Ankur, but one more query, suppose the remuneration is zero and other charges are paid then what will be the consequences.

Ankur Garg

Ankur Garg (Expert)

03 October 2009 Read section 314(3) which contain the definition of office or place of profit. It is saying over and above the remuneration to which he is "entitled" and not actually drawing.

Ankur Garg

Ankur Garg (Expert)

05 October 2009 Payment made by you to the director in other capacity would be considered as remuneration unless you obtain approval of Central Govt.

Read proviso to section 309(1) carefully.

Regards

You need to be the querist or approved CAclub expert to take part in this query .
Click here to login now