Office or place of profit - Prohibition against director holding - Prescribed limit under rule 10C of General Rules and Forms - Companies Law - Circular : No. 2 of 1994

Circular : No. 2 of 1994 [No. 3/9/92 ‑ CL ‑ V], dated 3 ‑ 3 ‑ 1994. Subject:- Office or place of profit - Prohibition against director holding - Prescribed limit under rule 10C of General Rules and Forms The provisions of section 314 of the Companies Act, 1956 impose certain conditions which govern appointment of a director, his relative or partner or relative of a partner, etc., to an office or place of profit in the company. In terms of these provisions and the notification issued thereunder by the Central Government, no director, his relative or partner, etc., could hold an office or place of profit in the company except with the consent of the company by a special resolution if the office or place of profit carried a monthly remuneration of Rs. 6,000 or more. However, where the monthly remuneration was Rs. 12,000 or more, prior consent of the company by special resolution and approval of the Central Government was also required. 2. Over the last few months, Central Government have made sweeping changes in provisions governing appointment and remuneration of managerial personnel in public limited companies. As a measure of extension of the liberalised policies of Govt. in regard to managerial appointment and remuneration, Government have vide Notification No. GSR 286(E) [rule 10C of General Rules Forms] published in the Gazette of India, Extraordinary, dated 1‑3‑1994, revised the aforesaid limits to Rs. 10,000 p.m. and Rs. 20,000 p.m., respectively. As a result of the notification, consent of the company by special resolution would be needed for appointment of a director, his relative, partner, etc. only if the remuneration payable is Rs. 10,000 p.m. or more and prior consent of the company by special resolution and approval of the Central Government would be needed only where the remuneration payable is Rs. 20,000 or more.