Remuneration to director

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Querist : Anonymous

Querist : Anonymous (Querist)

11 January 2011 Whether a non-executive director of a public company (unlisted) can be paid a remuneration on his professional capacity in addition to the sitting fees? Is any approval required for the remuneration in professional capacity? Plz suggest. Regds.

udit sharma

udit sharma (Expert)
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11 January 2011 Hi...

As per the provisions of secion 309 of the Companies Act, 1956 remuneration payable to the Directors shall be inclusive of the remuneration paid to them in lieu of services rendered in any other capacity.

However, the remuneration paid for the professional services rendered by the Director shall not be included, provided:

a)the services rendered are of professional nature,

b) in the opinion of the Central Government, the concerned Director possesses requisite experience or knowledge to practice the profession.

Hence, in my opinion, we need to obtain the opinion of the Central Government as to whether the concerned Director possesses requisite qualification or experience to practice the profession.

Further, the sitting fees payable to the Directors is not be taken into consideration in determining the total managerial remuneration as per the provisions of section 198 of the Companies Act, 1956.

God Bless

CS Udit Sharma

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Querist : Anonymous

Querist : Anonymous (Querist)

11 January 2011 But what is the procedure to obtain Central Govt. opinion in this regard whether the director possess professional qualification? plz clarify. thanx.

udit sharma

udit sharma (Expert)
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11 January 2011 In my opinion you should write a letter to Ministry of Corporate Affairs, on the Letter Head of the Company detailing therein the qualifications and experience of the Director with respect to the profession he is practicing and seeking the opinion of the Central Government as to whether in its opinion the Director possesses requisite qualifications/ expertise to practice the profession.

Experts kindly share ur views nd correct me if i m wrong....

God Bless

CS Udit Sharma

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