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Sleeping Directors

SAM (Partner) (32 Points)

01 October 2009

I would like to know the roles and responsibilites of sleeping directors.. Are they elligible for monthly salary and what will be the rights for sleeping directors in a Pvt. Ltd Company

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10 Replies

(Guest)

there is no concept of Sleeping director under the companies act, 1956.

However, there is provision related to Independend Director (Non Executive Director) in the companies act, 1956, who gets the salary on the basis of attending the board meetings & not on the monthly basis.

Independent director is not liable for any act of the company. He is liable if, there is something wrong doone by company in the board meetings.

If you need further clarification than contact me

Ankur Shah (Practicing Company Secretary)

“Guru Gautam” Bungalow, Inside Parshwa Tower,

Nr. Shyamal Cross Road, 132ft. Ring Road,

Satellite, Ahmedabad – 15

Contact: + 91-9427633901

E-mail: ankurjewel @ gmail.com

Blog: csankur.blogspot.com

SAM (Partner) (32 Points)
Replied 03 October 2009

If there are 6 directors holding 1/6 share each in a pvt ltd company.. and out of 6 4 are working and rest 2 are non working director what will be the provision for salary for this kind of scenario

Can you please help me out about this concept?

Regards

SAM

(Guest)

there is no provision regarding the salary on the basis of working.

give the any amount as salary to any person.

Sleeping director will not get salary on the monthly basis, they will get the salary on the basis of seating fee.

SAM (Partner) (32 Points)
Replied 03 October 2009

But as you mentioned that there is no concept of sleeping director then will there be a classifcation provision as working and non working director? and when all the directors are equal share holders is there any provision of making working and non working directors and there by making non working directors on the basis of seating fee (specially in the light of that every director holds equal share)

Regards

SAM

(Guest)

there is no classification in company law about the working and Non working director.

It is not compulsory that for being director, you should have the shareholding.

Any person can become the director.

The salary is given to the director not only on the basis of working, but Intelligence, experience, etc. are also the bearing factor.

SAM (Partner) (32 Points)
Replied 03 October 2009

Thanks Actually we are in a dilema about 2 share holders how to fix up the salary for them? because they will be non working.. They are equal share holders but will be non working

Regards

SAM

(Guest)

Suppose You are giving salary of Rs. 10000 to each working director &

If you want to give the same amount of salary to the non working director also,

Then follow the below mentioned steps.

Hold 1 board meeting in each month.

Decide seating fee on the meeting to meeting basis.

No, If in a particular month only 1 meeting is held, then give rs. 10000 as seating fee for that month to sleeping director.

If 2 meetings are hold in the month than give seating of Rs. 5000 for each meeting tosleeping directors.

SAM (Partner) (32 Points)
Replied 03 October 2009

Actually We do not want to pay monthly salary for non working directors..Only profit share whatever will come up at the end of the year will go his account what will be the procedure?

SAM

(Guest)

then, do not fix the salary, at the end of the year, hold board meeting & in that share the salary accordingly

Suppose

Profit is Rs. 720000, then each director will get Rs. 120000.

suppose there are 6 board meeting is held through out the year.

Now in the board meeting pass the resolution stating that

Working directors will get Rs. 10000 pm as salary

non working director will get Rs. 20000 as sitting fee per meeting

sntc 7070 (3 Points)
Replied 21 February 2023

Question: Can a non executive director of an unlisted company be an employee of the same company

For example, the son of a micro enterprise pvt ltd company was included as a director when he turned 19. But that son was studying and immediately after grad, he joined as a trainee, a full time employment with a fixed salary, in his parents pvt limited unlisted company? Given the case of no profit or loss and hence no income as a director.

Is this possible, is it legally right.