section 314 -urgent help required please

Section 314(1B ) is not applicable of a relative of a director is appointed as MD or WTD.

That's why I think that this Section will not be applicable here.

Hi,

In your case section 314(1B) is applicable and exemption to MD is not available because this exemption is available only in section 314(1).

You have to first collect prior approval of shareholder through special resolution and later on apply for CG approval. Infact approval of shareholder is subjct to the approval of CG.

Views of other members solicited.

Regards

Well according to me section 314(1B) is applicable because:

1. Proposed remuneration is more than the limit mentioned in section 314(1B).

2. Proposed MD is the relative of a director (As his mother (wife of chairman) is already a MD in the company).

3. Mother as MD drawing remuneration from the company.

4. The conditions mentioned u/s 314(3) are fulfilled as Proposed MD is on office or place of profit.

There are some other points in my mind. We may discuss them later.

Kindly advise if am wrong. Kindly correct me.

K/A  Ankurji,

section 314(1B) says "Nothwithstanding anything contained in sub-section (1)...............

hence i believe that it does not apply to MD.

Please correct me if i am wrong here.

Else can we talk on phone for  while please. request your cell no.

Thanks

@ Mr. Srivastava

Yes you are misinterpreting the phrase "Nothwithstanding anything ..."

Main section is section 314(3) which defines what is office or place of profit.

According to me in your case proposed MD is on office or place of profit due to his relationship status with existing MD (Mother-son relationship).

Other views solicited.

@ Kuldeep

In your first reply you have mentioned that "untill it exceeds the limit"

Mr. Srivastava is planning to give remuneration of Rs. 5 lacs. p.m. [10 times the limit mentioned in section 314(1B)]to the proposed MD. Now kindly suggest the interpretation of "untill it exceeds the limit".

Yes you are right we have to analyse the clarification. But now i don't have the extract of clarification as right now am travelling.

Regards

Sec 314 (1B) will not be applicable as the appointment of MD is governed by Schedule XIII.

Ankur Sir,

I have checked with a couple of practicing CS who are consensus with my views. i.e. notwithstanding anything contained in sub-section (1),....................................i.e. if we read section 314(1) then it excludes managing director.

Please let me know if it talks about subsection (1), i feel that full provision of that subsection is included.

Mr,. Kuldeep: as far as appointment of md is concerned, yes, we have taken into account the provisions of section 269, Schedule XIII, 198, 309 349 and 350. but the question over here is applicability of section 314(1B) and approval of Central Govt. as the relationship of md is there with the existing chairman as well as the other existing md. hence appointment of md  in a company where already a director is there who is relative of this md. so, whether the remuneration paid to the proposed appointment of new md attracts provisions of section 314(1B) thereby approval of Central Govt.

Please interpret the law in light of above facts. and correct me if i am wrong.

Thanks & Regards

thank you Mr. Rahul.