Dear all,
I am faced with the following fact situation:
A and B are directors of a private company, XYZ.
A, B, and C (who is the brother of B) enter into employment contracts with XYZ under which, each one is given a designation and is entitled to a fixed remuneration.
Will the employment of A, B and C be affected by Section 314, i.e. do I need to get special resolution/ Central govt approval for A, B or C?
Yes, the provisions of section 314 will apply for B, as his relative is getting remuneration from the Company. Either make C also a director of the Company or pass special resolution for the payment upto Rs. 2.5 Lacs p.m.
Prior approval by way of Special Resolutio is required in case the remuneration exceeds Rs. 50000 and upto Rs. 2.5 Lacs.
In case of remuneration more than Rs. 2.5 Lacs p.m. the approval of central government is also required to be obtained.
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