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Director

Others 639 views 5 replies

can a relative of existing director can be appointed as director?

Replies (5)
Yes there is no prohibition in company act

yes may be appointed. no restriction

As per section 2(76) of companies Act, 2013 the term "related party", includes a director or his relative. So in your case said relative is a related party.

 

Accordingly you have to ensure or review the compliance of section 188(1)(f) i.e. appointment of Director’s relative to any office or place of profit in the company, its subsidiary company or associate company.

 

In case it is office or place of profit than you have to pass a board resolution for approving this appointment.

 

I hope above input would be of some help.

 

Thanks

Relevant extract of section 188 is given below for your ready reference along with meaning of office or place of profit.

 

188. (1) Except with the consent of the Board of Directors given by a resolution at a meeting of the Board and subject to such conditions as may be prescribed, no company shall enter into any contract or arrangement with a related party with respect to—

(a) sale, purchase or supply of any goods or materials;

(b) selling or otherwise disposing of, or buying, property of any kind;

(c) leasing of property of any kind;

(d) availing or rendering of any services;

(e) appointment of any agent for purchase or sale of goods, materials, services or property;

(f) such related party's appointment to any office or place of profit in the company, its subsidiary company or associate company; and

(g) underwriting the subscripttion of any securities or derivatives thereof, of the company:

 

Explanation.— In this sub-section,—

(a) the expression "office or place of profit" means any office or place—

(i)   where such office or place is held by a director, if the director holding it receives from the company anything by way of remuneration over and above the remuneration to which he is entitled as director, by way of salary, fee, commission, perquisites, any rent-free accommodation, or otherwise;

(ii)  where such office or place is held by an individual other than a director or by any firm, private company or other body corporate, if the individual, firm, private company or body corporate holding it receives from the company anything by way of remuneration, salary, fee, commission, perquisites, any rent-free accommodation, or otherwise;

thans to all it will help me alot

 

 


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