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Employing spouse in private ltd company without taking consent of other directors

Others 580 views 1 replies

Supremo Vinod Shah

Adviser

52 Points Joined July 2012

Dear Experts,

One of Director from our Private Limited Company want to appoint his wife as an employee in the Company without taking consent of the other two directors (shareholders). Is it legally accepted? if not, under which rule?

Kindly guide me.

(Vinod Shah)

Replies (1)

Vibha Trivedi

437 Points Joined October 2018

It is a Related Party Transaction under section 188 of the Companies Act, 2013.
Hence a Board Resolution is required to be passed.

If appointment is made without authority of board resolution, it has to be ratified by the Board within 3 months.

If these provisions are not complied the director will have to face penal consequenses.