Approval under the sub‑section is necessary only if a relative is appointed in some capacity other than a whole‑time or managing director - Companies Law - No. 3/36/87‑CL‑V,

Letter No. 3/36/87 CL V, dated 29 5 1969 in reply to Thane Manufacturers Association; letter No. MJJ: ST dated 12th April, 1969 (extracts). Subject:- Approval under the sub section is necessary only if a relative is appointed in some capacity other than a whole time or managing director Query : Whether approval under section 314(1B) would not be required for appointing any of the relatives of a director or managing director as whole time director of the same company, if such appointee fulfils the condition laid down in Schedule XIII. Attention is invited to sub section (3) of section 314 as well as Circular No. 4 of 1976, dated 11 2 1976 [see above], which stated that unless the remuneration paid to a director was over and above the remuneration to which he would be entitled as managing or whole time director, his holding of office would not be deemed to be an office or place of profit under the company, in which case, the question of application of provisions of section 314(1B) did not arise. It appears that the policy of the Government is not to control the appointments of the relatives of directors as whole time or managing directors and, thus, approval under section 314(1B) would be necessary only if a relative was appointed in some capacity other than a whole time or managing director. Answer : The view expressed by the querist above is confirmed. It may, however, be stated that approval of the Central Government for appointment of whole time director under section 269 will be necessary, unless the conditions specified in Schedule XIII are satisfied.