can anyone please summaries the said section... explain itin a simplified language...
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Companies act....sec 314
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Hi Akarsh Goyal
Section 314 of the Companies Act, 1956 says about Holding office or place of profit.
Purpose: To restrict any person holding office or place of profit. to AVOID MISUING OF FUNDS AND AVOIDS IMPROPER SIPHONING OF FUNDS.
Applicability: Both Private and Public companies, where directors remuneration is excess of Rs.50,000, other persons any amount received as remuneration and for body corporate any amount received as remuneration.
Section Applies to: Individuals, Firms and Body corporate.
Individuals : 1. Directors, 2. Relative of director, 3. Partner of director /relative of director, Director / member of a private company.
Firms : 1. Directors, Partner and 2. Relatives of partner
Body Corporate: 1. Director or Relative of Director of a private company, is director or partner in other company or firm.
The provision has two sets of conditions:
Ist set of conditions u/s 314(1):
Requires members approval if the directors remuneration exceeds Rs. 50000.
Special resolution in the First General meeting or within 3 months whichever is later.
It can be a company or subsidiary of a company
No restriction that he not be in the pa roll of employment but can be contract.
Special resolution for change in every appointment if not mention in the scale.
It is not applicable to Manager, Managing Director, banker, Trustees of Debenture Holders and
Directors appointed u/ 408 of Companies Act, 1956.
2nd Set of applicability u/s 314(!A)
Central Government approval shall be obtained subject to members approval
If the director remuneration exceeds Rs. 2.5 Lakh pm.
Hope the above is clear to you.
Rajeswari.
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