309. Remuneration of
directors.
(1) The remuneration payable to the directors of a company, including any managing or whole- time director, shall be determined, in accordance with and subject to the provisions of section 198 and this section, either by the articles of the company, or by a resolution or, if the articles so require, by a special resolution, passed by the company in general meeting and the remuneration payable to any such director determined as aforesaid shall be inclusive of the remuneration payable to such director for services rendered by him in any other capacity: Provided that any remuneration for services rendered by any such director in any other capacity shall not be so included if-
(a) the services rendered are of a professional nature, and
(b) in the opinion of the Central Government, the director possesses
the requisite qualifications for the practice of, the profession.
(2) A director may receive remuneration by way of a fee for each
meeting of the Board, or a committee thereof, attended by him: Provided that
where immediately before the commencement of the Companies (Amendment) Act,
1960 , (65 of 1960 .) fees for meetings of the Board and any committee thereof,
attended by a director are paid on a monthly basis, such fees may continue to
be paid on that basis for a period of two years after such commencement or for
the remainder of the term of office of such director, whichever is less, but no
longer.
(3) A director who is either in the whole- time employment of the
company or a managing director may be paid remuneration either by way of a
monthly payment or at a specified percentage of the net profits of the company
or partly by one way and partly by the other: Provided that except with the
approval of the Central Government such remuneration shall not exceed 5 %. of the net profits for one such director, and if there is more than one
such director, 10 %. for all of them together.
(4) A director who is neither in the whole- time employment of the
company nor a managing director may be paid remuneration- either (a) by way of
a monthly, quarterly or annual payment with the approval of the Central
Government; or
(b) by way of commission if the company by special resolution
authorises such payment: Provided that the remuneration paid to such director,
or where there is more than one such director, to all of them together, shall
not exceed-
(i) 1 % of the net
profits of the company, if the company has a managing or whole- time director,
a managing agent or secretaries and treasurers or a manager;
(ii) 3 % of the net profits of the company, in any other
case: Provided further that the company in general meeting may, with the
approval of the Central Government, authorise the payment of such remuneration
at a rate exceeding 1 %. or, as the case may be, 3 % of its
net profits.
(5) The net profits referred to in sub- sections (3) and (4) shall be
computed in the manner referred to in section 198, sub- section (1).
(5A) If any director draws or receives, directly or indirectly, by
way of remuneration any such sums in excess of the limit prescribed by this
section or without the prior sanction of the Central Government, where it is
required, he shall refund such sums to the company and until such sum is
refunded, hold it in trust for the company.
(5B) The company shall not waive the recovery of any sum refund- able
to it under sub- section (5A) unless permitted by the Central Government.
(6) No director of a company who is in receipt of any commission from
the company and who is either in the whole- time employment of the company or a
managing director shall be entitled to receive any commission or other
remuneration from any subsidiary of such company.
(7) The special resolution referred to in sub- section (4) shall not
remain in force for a period of more than five years; but may be renewed, from
time to time, by special resolution for further periods of not more than five
years at a time: Provided that no renewal shall be effected earlier than one
year from the date on which it is to come into force.
(8) The provisions of this section shall come into force immediately
on the commencement of this Act or, where such commencement does not coincide
with the end of a financial year of the company, with effect from the expiry of
the financial year immediately succeeding such commencement.
(9) The provisions of this section shall not apply to a private
company unless it is a subsidiary of a public company.
Comments
Post a Comment