Regarding approval from central goverment.

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This query is : Resolved

Mohit Kumar Naharia (Querist)

16 October 2013 A Chartered accountants is director (Independent) in a company. He is setting only in Board meeting and nothing eleswhere. He provided some services to her company lyk consultancy, fill service tax return etc.

according to sec 297 and 299 he is liabile to reported in related party transtaction.

nw que., Kya CA ko CG se approval leni padegi in sab ke liye. ( sec 297 & 299 me likha hua h ki leni padegi bt ek circular aaya tha jisme solicitor/advocates or professional person services dete h to approval lena koi compulsory ni h)

Ajay Mishra

Ajay Mishra (Expert)

16 October 2013 Hi

Section 297 does not apply to:

1. Giving or taking loans.
2.Contract in respect of immovable property (as it is not 'good' ).{Letter No. 9/4190-CL-X dated 27.03.1990}.
3.Contract between two public Companies.
4.Contract of employment of director or managing or whole time director.[ Circuler No.8/11/75-CL-V dated 27.03.1975]
5.Contract for employment of relative of director.
6.Contract entered into by the company with the dealer on principle to principle basis. [Circuler No. FM 8/297/56-PR dated 02-08-1956]
7. Professional services of the nature given by firms of solicitors and advocates, etc.[circuler No. 8/11/75-CL-V dated 05.06.1975]
8.hiring of office premises on rent as the transaction is in immovable property. [Department Clarification dated 10-09-1990]

Mohit Kumar Naharia

Mohit Kumar Naharia (Querist)

17 October 2013 can service provided by CA can be termed as Professional Service with in the meaning of Circular No.8/11/75-CL-V dated 05.06.1975 as the circular ends with the words "solicitors and advocates,etc"?

Ajay Mishra

Ajay Mishra (Expert)

17 October 2013 This circular not given in details at it end with advocates, etc.

Mohit Kumar Naharia

Mohit Kumar Naharia (Querist)

17 October 2013 if we consider that "etc" include Professional Service by CA than section 297 will not apply to this case or even CG approval not required right?

Ajay Mishra

Ajay Mishra (Expert)

17 October 2013 Yes, You can take the benefit of it.

Mohit Kumar Naharia

Mohit Kumar Naharia (Querist)

17 October 2013 Thank You Sir

Ajay Mishra

Ajay Mishra (Expert)

17 October 2013 My Pleasure........

Mohit Kumar Naharia

Mohit Kumar Naharia (Querist)

17 October 2013 receiving fees from the company in which that CA is Director will it attract section 314?

Ajay Mishra

Ajay Mishra (Expert)

17 October 2013 Hi
As per section 314(1) certain persons as given below cannot hold office or place of profit carrying the remuneration of Rs. 10,000 p.m. or more in the company, unless a special resolution to that effect has been passed in the general meeting of the company:—
1. Any partner of the firm in which director of the company is also a partner;
2. Any relative of a director of the company;
3. Any firm in which a director or his relatives or both are partner;
4. Any private company in which director of the company is holding office of director or member;
5. Any director/manager of a private company in which director of the company is holding office of director or member.
For computing the limit of Rs. 10,000 per month, bonus, leave encashment, reimbursement of medical expenses, etc., which are not events of monthly regularity or occurrence cannot be taken into account.
Where relative of any director or any of the person mentioned above is or appointed to an office or place of profit without the knowledge of director of the company, such appointment shall require the approval of the members in the general meeting by way of special resolution within 3 months of the date of appointment.

Ajay Mishra

Ajay Mishra (Expert)

17 October 2013 On the basis of above if such person is taking director remuneration and also fee from the company then it will cover under section 314.

However, a person who is a auditor of the company can not become director of the same company.

Mohit Kumar Naharia

Mohit Kumar Naharia (Querist)

17 October 2013 In Ramaiya (Guide to the Companies Act)they have given in the notes to section 314 that prohibition under sub section(1) and (1-B) is not applicable to the remuneration/compensation given to the person for services of professional nature but it will apply in case the services are render on regular retainership basis.So if Company & the Director who is CA if they enter into Contract for providing such services & monthly fees is more than Rs.10000 than it will be treated as retainership basis or not?

Mohit Kumar Naharia

Mohit Kumar Naharia (Querist)

17 October 2013 He is not the Auditor of the Company.He is only a director(CA) & giving Professional services as he is CA.

Ajay Mishra

Ajay Mishra (Expert)

17 October 2013 He is receiving any director remuneration or not. Confirm.

Mohit Kumar Naharia

Mohit Kumar Naharia (Querist)

17 October 2013 He is not getting any Director remuneration from the Company.

Ajay Mishra

Ajay Mishra (Expert)

17 October 2013 Then section 314 is not apply. The provision of section 314 will apply, if he draw remuneration from office or place of profit with director remuneration.

In your case he is not receiving remuneration as director then he can take such fee and will not covered under section 314.

Mohit Kumar Naharia

Mohit Kumar Naharia (Querist)

17 October 2013 as per section 314 the word remuneration include fees, commission,salary etc than whether 314 will be applicable or not?

Ajay Mishra

Ajay Mishra (Expert)

17 October 2013 Such fee is discussed under section 314 is for office or place of profit. read my above answer carefully.

Mohit Kumar Naharia

Mohit Kumar Naharia (Querist)

17 October 2013 So in my case section 314 will not apply right.

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