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remuneration to additional director

Dipika Verma (Company Secretary) (174 Points)

17 May 2011

Can we pay remuneration to additional director? If yes then how? What procedures are to be complied with?

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7 Replies

SkDash (CS (Member) CWA (Final)) (909 Points)
Replied 17 May 2011

Deepika-where do you find the problem ? Addl director is a director in all respect and all the prov of the Act except as otherwise provided (like terms of his office etc) will be applicable to him/her.

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SANTOSH SHAH (Company Secretary) (754 Points)
Replied 17 May 2011

Originally posted by : Dipika Verma
	Can we pay remuneration to additional director? If yes then how? What procedures are to be complied with?

Hi Dipika

Directors are entitled to remunneration in terms of salary, fees, commission, etc. Additional Director is also

a director and so he too is entitled for remunerration for the services provided.

What differs for additional director is the regularization of such director in GM.

if Regularization is not done in GM, then he ceases to hold office as Director unless Re-appointed.

There is no specific procedure to make payment to direcors in my view.

Kindly check your articles which would put some light on the remunneration and

mode if any to additional directors.

Other views solicited.

regards

Santosh Shah

Dipika Verma (Company Secretary) (174 Points)
Replied 17 May 2011

Additional Director is Ordinary Director or Non Executive Director.They are usually paid sitting fees. They can be paid remuneration with the approval of Central Government or Commission with the consent of shareholders in general meeting.

Do you agree with this?If not please clarify.

Priya Sharma (Company Secretary & Student.MBA) (998 Points)
Replied 18 May 2011

Dear Dipika

Part II of Schedule XII clearly says that, in case of a Company having profits, it can pay any remuneration, which includes salary, DA, perquisites, commission and other allowansces whch shall not exceed 5% of its net profit for one managerial person and if theer are more than 1 such managerial person, 10% for all of the together.

Answer to your query:

Any remuneration shall be subject to the approval by a resolution of the shareholders in a General Meeting._Part III of Schedule XIII of the Act.

No separate C.G. approvals is required for paying reumneration, it it is within the limit as specified under the Act.

Kindly note that ther term"remuneration" includes salary, dearness allowance, perquisites, commission and other allowances.

Wait for the views of hte experst.

Regards

Jayashree S Iyer (Company Secretary) (3224 Points)
Replied 18 May 2011

There is no bar in paying remuneration to Additional Directors, subject however to the approval of shareholders.

As per the latest MCA circular, CG approval is required only in case of listed companies paying remuneration exceeding the limits specified in Schedule XIII.

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Rajeev kumar Nayak (ACS) (283 Points)
Replied 18 May 2011

Hi,

There is no problem in paying remuneation to Additional Director. Normal provision as applicable to other director will also apply in case of Additional Director.

for example- An additional director can be appointed as MD of the Company and in that case you can pay to him as per normal provision as applicable to MD. only extra compliance is such additioanal director is required to be regularized at coming AGM otherwise he will vacate the office of director as well as MD.

Thanks

Rajeev Nayak

Jyotika (study study n study) (147 Points)
Replied 19 May 2011

Non executive director cannot be paid remuneration you have to appoint that additional director as whole time director or md.only then you can pay remuneration otherwise you can pay only sitting fee.............

if you pay remuneration to non executive director this will fall under office or place or profit under section 314 and you have to follow those provisions..................

others views are welcome