Office of Place of Profit

Dear Muralidaran,

There is no restriction at all for the maximum limit of remuneration the only thing is that if you cross the limit as specified in the companies act, then you need to take prior approval from the specified authorities.

In your case you can increase the remuneration upto 50,000 pm or more only by passing a special resolution in the shareholders meeting and prior approval of the Central Goverment as well.

Procedure are as follows:-

1. Hold Board meeting to call general meeting.

2. Hold GM and pass the special resolution

3. File e-form 23 with ROC alongwith the copy of Resolution.

4. File application in e-form 24B for CG approval.

5. CG may vary the terms and conditions. After getting approval enter in to contract with the concerned person.

Any further query pls feel free to ask.

8th June 2011

Dear Mr.Ankit Jain

Thankyou for your reply. However I fogot to add one important query. The company wants to pay monthly remuneration of Rs.50000/- to the relative of the director. However we do not want to go to the Central Government for its approval. Approval of the Board and Members will be obtained. Kindly advise whether the same is permitted. This question is being raised in view of the recent amendments notified to the office of place of profit rules. Kindly advise.

With regards

Muralidharan

According to me the approval of the Central Govt is required in case the remuneration is exceed Rs.50000, so in the above case Central Govt approval is not required.

Agree with Mr. Bijoy.  CG approval is required only if the remuneration exceeds Rs.50,000/-.

In the instant case specical resolution is sufficient.

Dear Members

Thankyou for your reply. Please inform whether the Special Resolution is required to be passed PRIOR to payment of the remuneration or is it enough if the same is passed in the next general meeting after commencing the payment.

with regards

Muralidharan

Upto Rs. 20,000/- approval of Shareholders by way of Special Resolution.

In case the remuneration exceed Rs. 20,000/-, Prior Approval of Shareholders by way of Special Resolution required.

HOwever, the limit of Rs. 50,000/-  has also been increased to Rs. 2,50,000/-, therefore remuneration of Rs. 20000 to Rs. 250000 requires prior approval of shareholders by way of Special Resolution