Section 314

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This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

20 June 2012 Sir,

ACTUAL SCENARIO :

Their is a Public Limited Company X in which Mr. A is the director.

Mr. A is drawing salary of 15000/- per month.

Spouse of Mr. A is drawing monthly salary of Rs. 10000/- in the same company.

PROPOSED :

Now we propose to increase the spouse's salary to 15000/- per month and Mr. A's Salary to 20000/- p.m.

Can Son of the director Draw Monthly Salary of Rs. 22000/- who is professionally qualified.

I was a bit confused with the reading of Section 314 and its amendment.

So needed the guidance in how to proceed for such proposal keeping in view the amendment of Section 314.

Thank you in advance.

Ajay Mishra

Ajay Mishra (Expert)

20 June 2012 Hi

In case of spouse salary, it will be covered under section 314(1) of the Companies Act, 1956.

As per explanation to section 314(1) fresh approval for higher remuneration is not necessary if appointment with increased remuneration on time scale has already been approved by special resolution.

If you are increasing director remuneration from 10,000 to Rs. 20, 000 it will not covered under section 314. It cover under section 198 of the Companies Act.

In case of son of director, they can draw remuneration with approval by special resolution in accordence with the provision of section 314 (1) of the Companies Act, 1956.

Regards

Querist : Anonymous

Querist : Anonymous (Querist)

21 June 2012 Thank you very much Mr. Ajay.

The approval required by special resolution must be Prior or post approval will also do.

Ajay Mishra

Ajay Mishra (Expert)

21 June 2012 Hi

Under 314(1) prior consent is not required, prior consent of shareholders and CG is required under 314(1B) of The Companies Act, 1956.

Querist : Anonymous

Querist : Anonymous (Querist)

21 June 2012 Thank you Sir.

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