Section 314 of the Companies Act, 1956

udit sharma (Company Secretary) (2303 Points)

08 December 2010  


There is a Company say ABC Ltd. having 3 Directors Mr.A,Mr.B and Mr.C. Mr. B is brother of Mr. A and is appointed as MD of Director of the Company. Now, as per the provisions of section 314 of the Companies Act, 1956 a relative of Director can hold the office of MD or Manager carrying a monthly remuneration of Rs. 15,000/-. Now, since Mr. B is holding the office of MD carrying the monthly remuneration of over and above Rs. 10,000, no approval of the members by way of a Special Resolution will be required.

Suppose, Mr. B ceased to be a MD of the Company w.e.f.27.04.2010 and continues to be a Director of the Company with the same remuneration, then whether it can be said that Mr.B is holding the office or place of profit from the date he ceased to be MD of the Company. Whether the consent of the members by way of a special resolution should have been obtained at the GM of the Company held immediately after he ceased to be MD but continued as Director of the Company??????

Please held??????