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TMI BlogWhether both transferor company and transferee company should move High Court for direction where companies involved in amalgamation are incorporated in different StatesX X X X Extracts X X X X X X X X Extracts X X X X ..... artment s views thereon are given below : 1. Section 314 applies to public as well as private companies. Sub‑section (1) of this section provides that no director of the company and no partner or relative of such director shall hold any office or place of profit, except that of managing director or manager, banker or trustee for the holders of debentures of the company, carrying a total monthly remuneration of Rs. 500 [Rs. 10,000] or more, under the company unless a special resolution according the consent of the company is passed at the general meeting of the company held for the first time after the holding of such office or place of profit. The new sub‑section (1B) says that notwithstanding anything contained in the afore ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion 314(1B) will have to be passed by a public company or a private company. 3. Further, consistently with reference to the special resolution in the main part of sub‑section (1B), it is necessary to understand the reference in the proviso of the sub‑section to the approval of the company in general meeting as meaning the approval by a special resolution of such meeting. But in a case where the special resolution was passed in terms of sub‑section (1), it will not be necessary to have another resolution ordinary or special, once again and only the approval of the Central Government in terms of the proviso to sub‑section (1B) will be necessary. 4. Another question raised is whether approval of the general meet ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... b‑section (1B) expressly overrides sub-section (1) and calls for the exercise of a greater vigilance against the likelihood of the abuse of patronage in a case where the remuneration proposed is of the order of Rs. 3,000 per month and more. 6. A question has also been raised whether provisions of section 314(1B) are applicable where a company proposes to appoint a firm of solicitors and advocates, etc., to help the company in its work. It is considered that an advocate or solicitor appears in a court of law as an officer of the court in pleading the cause of justice and hence, such appearance and receiving fees on that account cannot lead to an inference of an office or place of profit in or under the company under section 314. Ho ..... X X X X Extracts X X X X X X X X Extracts X X X X
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