Interested Director in Pvt Ltd Co

Dear Experts,

We have just formed a new Pvt Ltd, wherein Mr. VKK and his wife SVK and myself are directors.

Mr. VKK has developed a water harvesting technique for which he recd the Indian Patent . He will be giving the rights of this patented technique to this KRwH Pvt Ltd and the Pvt Co will be paying Royalty to Mr. VKK.

However, the consultant say the above transaction between KRwh Pvt Ltd and Director-Mr, VKK will amount to Director being Interested and thus entail lots of compliances and lots of objectionalbe query by various govt depts- Co Law, Income Tax, etc

Hence, the consultant advices that Mr VKK, although he can be major shareholder, should not be the director and can be a CEO or President of Pvt Ltd Co and under power of attorney / authority of the Pvt Ltd , he can sign, deal, give presentation, enter into contracts on behalf of the Company.

Dear Experts, kindly give your expert opinion and advice.

Thanks in advance.

regards,

Sanjay Agarwal=93729-56550

Aurangabad

Dear Sanjay Ji,

Yes, It will be the transaction in the nature of "Trasaction with Interested Director" and this will surely need compliances of Companies act, Income Tax Act etc. Even if he is not being appointed as Director, then also the compliance will be needed in respect of his wife Mrs. SVK.. becoz she will become interested director as the transaction is with her spouse..

I think if justified amount of payment is made to the Director as royalty then not it will not be objectionable by any authority as u'll be hving supporting for the appropriate payment.

On the matter about Compliances in various laws, I just want to say that it is the part of the business if we want to develop a big business. I dont think that it is so much complecated to comply wid various requirements of the laws. The consultant may do all the compliances if u r ready to pay appropriate fee for all these, I dont think he will refuse to do.

If u need any type of help, then u can contact me on e-mail or phone..

Adarsh