tips for directors

Originally posted by : CS Neeraj Mudgal
	Dear All i feel immense pleasure in sharing certain important tips for the Topic directors for CA final. i hope u all will find it useful. regards cs Neeraj Mudgal

Dear Mr. Neeraj,

This reply is with respect to the Heading "DIRECTOR’S BROTHER IS APPOINTED AS THE SELLING AGENTS" given by u on page no. 5 of the file attached by u, which reads as follows: 
 
"A contract is entered into between the company and the relative of the director for the appointment as the selling agent under sec. 297.  [ALL CO.]
 
In the above case section 297 is being complied with , therefore sec. 314 need not be followed .
 
GIST : if you are complying with one particular set of law then another law need not be followed."

It is really surprising rather disappointing as to how can u make a general conclusion that if you are complying with one particular set of law then another law need not be followed.

The conclusion that if a relative of a director is appointed as a sole selling agent, then, Sec. 297 applies, which is a specific provision, and so Sec. 314 need not be complied with, was given by the DCA in a clarification. This clarification by DCA is very logical since one section (Sec. 297) is a specific provision and the other section (Sec. 314) is a general provision.

However, you have drawn a conclusion that if one set of law is complied with, then, another law need not be followed, is absolutely incorrect.

This is highly unexpected from a person who claims himself to be a faculty for CA Final and CA PCC.

Anybody who differs with my opinion is please requested to post his / her views.

Dear All

following discussion could be refered to so as to have an indepth knowledge of the various aspects of section 314.

i hope this will prove to be a value addition.

OFFICE OF MD/WTD

DCA has clarified that the office of MD or WTD is not an office or place of profit. A MD or WTD  draws remuneration to which he is entitled as the director. If he does not draw anything more than this, his holding office can not be said to be an office or place of profit. Also section 314(1) does not apply where the appointment is made at the office of a MD.

314(1B)

whether a special resolution  under section 314(1B)  is necessary for the appointment of managerial persons who may be relatives of directors and whose appointments are already governed by sec. 269 etc.

the answer is affirmative however for administrative convenience

it has been decided that the approval of the CG once again under this section shall not be necessary in cases where the  approval has already been taken under section 198, 269,309,310,311. as the case may be. However the SPECIAL RESOLUTION is required to be passed irrespective of above .

So far as the SR is concerned where the SR is already passed under subsection 1 and then subsection 1B gets attracted, then only CG approval is reqired and not a New SR.

APPOINTMENT AS SOLESELLING AGENT

Where the director’s brother is being appointed as the Sole Selling agents of the company. since the company is to comply with 294/294AA, therefore, there is no need to comply with sec. 314.

DCA

APPOINTMENT OF PART-TIME DIRECTORBrother of the director being appointed as the PTD

 IN VIEW OF ALL THE CLARIFICATION GIVEN BY DEPARTMENT FROM TIME TO TIME , WE CAN DRAW A PURSUASIVE VALUE THAT IF WE HAVE ALREDY FOLLOWED ONE TYPE OF REQUIREMENT FOR THE SAME TRANSACTION THEN WE NEED NOT END UP DOING THE DUPLICATION.

ONLY THE RESIDUARY REQUIREMENT SHALL BE COMPLETED.