Payment of professional fee to first director of a company

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Facts of the Case:

1. It is Private Limited Company (Incorporated in Nov 2018)

2. One of the director(being First Director) is rendering Professional Services to his company during his free time. There is no employer-employee relationship with his company, and  He is an Employee in some other company where he is getting monthly salary.

My Query is:

a. Can we pay him Professional fee for the services rendered by him instead of monthly remuneration? and if professional fee is paid, then under what section TDS is to be deducted, whether it is U/s 194J or 192?

b. if we can pay him professional fee for his professional services, should there be any specific provision in the articles of the company?

Replies (2)
yes fees can be paid. Tds under section 194 J. IN article of association generally all these things are mentioned. since it is a private company hence not much compliance are required.

Answer to query (b), make that person as 3rd and as non-executive director as you need to get the resolution for amount of professional fees ratified in the first board meeting of the company. Because he will be interested in that resolution and he will not be able to vote on the resolution. So, if there are 2 directors , then quorum conditions will not get satisfied, so better to make him as 3rd director.

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