query on compay law matter

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jagan reddypatlolla (Querist)
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13 December 2007 SIR MY QUERY IS WHAT IS THE POSITION OF THE PERMANENT DIRECTOR OF A PRIVATE LIMITED COMPANY? WHETHER HE IS AN EMPLOYEE OR EMPLOYER.

WHETHER SUCH DIRECTOR ARE ELIGIBLE FOR THE PAYMENT OF GRATUITY UNDER THE GRATUITY ACT 1972 OR NOT

S.Srinivasaraghavan

S.Srinivasaraghavan (Expert)
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15 December 2007 In the case of a director of a company, his position is one of fiduciary in nature, acting along with the other membersa of the Board of directors of the company in the best interest of the company and its shareholders, abiding the law of the land.Company is the employer and the Board is the body through which the company acts.

A director can also become an employee if he is employed by the board/company to look after a particular function of the company. The remuneration (including the gratuity)for such director can be fixed by the board itself if it is a private limited company.The payment of gratuity is exempt from the income tax to the extent provided in the Act.

A director can also be an employer if the job performed by the employers are entrusted to him by the Board to act on their behalf.

S.Srinivasaraghavan

S.Srinivasaraghavan (Expert)
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02 October 2008 The fact that he is a permanent director does not alter the above situation.

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