Post approval u/s 314 of the companies act
This query is : Resolved
25 October 2012
Dear All,
One of our director's relative occupies position of manger in the company and drawn salary at Rs. 40,000 p.m. from our company and the company has increased his salary to Rs. 80,000 p.m. from August 2011 till March 2012 and taken note of the same in the balance sheet.
The company has not obtained prior approval of Shareholder for paying salary to Director's relative.
Now my question is can a company obtain post approval u/s 314 of the Shareholder in the AGM held on or after 30.09.2012.
One of our director's relative occupies position of manger in the company and drawn salary at Rs. 40,000 p.m. from our company and the company has increased his salary to Rs. 80,000 p.m. from August 2011 till March 2012 and taken note of the same in the balance sheet.
The company has not obtained prior approval of Shareholder for paying salary to Director's relative.
Now my question is can a company obtain post approval u/s 314 of the Shareholder in the AGM held on or after 30.09.2012.
25 October 2012
Hi
The MCA has issued a Notification No. G.S.R. 357(E) dated 02.05.2011: In exercise of the power conferred by clause (b) of sub-section (1) of Section 642, read with sub-section (1B) of section 314 of the Companies Act, 1956, the Central Government hereby makes the following Rules in supersession of the earlier Notification No. 89(E) dates 05.02.2003 known as Director’s Relative (Office or Place of Profit) Rules, 2011.
In the said rule the limit of remuneration payment is exceeded from Rs.50,000 to Rs. 2,50,000.
So,I think no need to take CG approval because the notification is applicable from 2.05.2011 and your increase is from August 2011 i.e. after the notification date.
The MCA has issued a Notification No. G.S.R. 357(E) dated 02.05.2011: In exercise of the power conferred by clause (b) of sub-section (1) of Section 642, read with sub-section (1B) of section 314 of the Companies Act, 1956, the Central Government hereby makes the following Rules in supersession of the earlier Notification No. 89(E) dates 05.02.2003 known as Director’s Relative (Office or Place of Profit) Rules, 2011.
In the said rule the limit of remuneration payment is exceeded from Rs.50,000 to Rs. 2,50,000.
So,I think no need to take CG approval because the notification is applicable from 2.05.2011 and your increase is from August 2011 i.e. after the notification date.
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