Section 314(1B) clarification

Dear Mr. Muralidharan, As refered by you, it is not mandatory to obtain prior consent of members before apppoitnment under section 314(1).As per section, it shall be sufficient if the special resolution according the consent of the company is passed at the Gen.Meeting of the company held for the first time after the holding of such office or place of profit. Only where the consent of Central Govt. is needed u/s 314(IB), prior consent of members and central govt. is necessary. In this respect, please be guided further by Directors Relatives (office or place of profit) Rules 2003, as amended vide circular dated 6/4//2011, in addition to section 314 of the Act.

Dear Murlidharan,

Yes, in case the remuneration exceed Rs. 20,000/-, Prior Approval of Shareholders 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

Please find the directors relatives offiece or place of proft amendment rules 2011.

dear Sir, May the learned reader please advise where the requirement of prior approval by shareholders is given in the section or rules,except as provided under section 314(IB)read with rule 3 of DR(OPP) rules? Thanks

Section 314(1B) Notwithstanding anything contained in sub section (1)-

(a) no partner or relative of a director or manager,

(b) no firm in which such direcgor or manager, or relative of either, is a partner,

(c) no private company of which such director or manager, or relative of either, is a director or member,

shall hold any office or place of profit in the company which carries a total monthly remuneration of not less than [such sum as may be prescribed], except with the prior concent of the company by a special resolution and the approval of the central government.

Further, for prior consent a sum of Rs. 20000 has been prescribed under sub rule 2 of rule 10C of General Rules and Forms

Furthermore, no appointment shall take effect unless approved by the Central Government n an application in respect of appointment which carry a total montly remuneration of Rs. 250000/-