Remuneration to director

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Annie Jodhani (Querist)
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02 September 2013 I have a urgent query . If anyone can please help me with this .

A person is a MD in ABC pvt ltd co and receiving remuneration of 1.5 lakhs .

He is a director in other XYZ pvt ltd co. Now the XYZ wants to give him the same remuneration of 1.5 lakhs .

Now what is the procedure ? can the director get the remuneration ?

Thanks in advance

Ankit

Ankit (Expert)
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02 September 2013 Yes he can receive the remuneration….there is no problem…

Annie Jodhani

Annie Jodhani (Querist)
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02 September 2013 is there any need to change his designation from director to MD.

And what is the procedure ?

Ankit

Ankit (Expert)
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02 September 2013 A person cannot be an MD in 2 companies…thus, there is no violation in your case…
So, he can receive the commission…not problem…

But what is your perception????

Ajay Mishra

Ajay Mishra (Expert)
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02 September 2013 Hi

Yes, he can get the remuneration, because the provision of section 269 and remuneration provisions is not applicable on private limited companies.

Ajay Mishra

Ajay Mishra (Expert)
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02 September 2013
The provisions of Companies Act, 1956 and Schedule XIII deal with remuneration of director will not applicable to private limited company. Such provision is applicable only public company and its subsidiary.

The remuneration of directors of the private company is totally governed by their company articles. If the Company’s article permits to pay remuneration you can give remuneration without any restriction. For this you will pass a Board Resolution for payment of remuneration.

Annie Jodhani

Annie Jodhani (Querist)
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02 September 2013 Actuly the director is non-executive .

I doubt whether we need to change his designation to executive director ?

Ajay Mishra

Ajay Mishra (Expert)
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02 September 2013 Yes, need to change designation of such director.

If you are going to pay remuneration then you will change the position in Board meeting.

Annie Jodhani

Annie Jodhani (Querist)
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02 September 2013 Thank you so much experts .

CA Hardik Bunha

CA Hardik Bunha (Expert)
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02 September 2013 yes director can receive salary from two companies.

tds on his salary will be deductible u/s 194j

Ankur Garg

Ankur Garg (Expert)
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02 September 2013 Strict provisions related to managerial remuneration are not applicable to a private limited company. So he can take remuneration from both companies subject to the provisions of articles of the company.

Thanks

Ankur Garg

Ankur Garg (Expert)
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02 September 2013 Further the position of MD in one company signifies that he is devoting his whole time in that company. So taking remuneration from other company may be objectionable and should be avoided.
However current question is about private company so you may go ahead.

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