Whole time directorship - more than one private company
M S Subramanain
(Querist) 14 February 2015
This query is : Resolved
Whether a Director of two private companies not falling under the class of companies - (less than Rs. 10 cr capital thresh hold limit of Sec. 203 ) can continue as Whole Time Director and draw remuneration from both companies. He is not a KMP though his designation is WTD which is defined now. Under Sch V Part I (d) a Mangerial personnel (incl.WTD) is allowed to draw remuneration from more than one company. If so, whether limits set under Part - II - Section V of the Scheule V of the CA 2013 is applicable. The compliance with Sec 196 which is appliable to all companies including private companies is met. However Sec 197 and Sec 198 is not applicable to these private companies. If not what is the best legal alternate.
ROHIT SHARMA
(Expert) 14 February 2015
1. A Key Managerial person (K.M.P) in relation to a company is defined u/s 51 of the C.Act, 2013 and such appointment includes that of a Whole Time Director (W.T.D.) as included in such s/51(iii).
2. U/s 203 of the C.A. a company not falling under class of companies - i.e. less than threshold of Rs, 10 Cr. capital - then the appointment of K.M.P. as W.T.D. entitles such K.M.P. (W.T.D. as per s/51(iii) )then the limits for remuneration for W.T.D. is mentioned in Sch. V - Part II s.II of the C. A 2013 is applicable to such W.T.D.- which then is further elaborated and expanded under Sch. V Part II s. V which entitles a K.M.P.( i.e. W.T.D.) two draw remuneration from both such companies.
3. Yet, one of the provisions cited u/s 203 provides that if such K.M.P.(W.T.D) is serving under more than one company then such K.M.P.(W.T.D) shall within a period of six months after the commencement of C.A. 2013 ( i.e. 1-4-14) chose one company in which he chooses to hold the office of K.M.P. Hence this rider then overrides the provision contained under Sch. V Part II s. V which entitles a K.M.P.( i.e. W.T.D.) two draw remuneration from both such companies.
4. For a better review AND if you may feel it appropriate to have extended discussion then you can opt to have direct private phone consultation with this lawyer provided that you are willing and agree to pay moderate sum for remuneration for such purpose.
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T. Kalaiselvan, Advocate
(Expert) 17 February 2015
Academic query, you may consult a local consultant and get clarified.
