Sitting fee twice

[Rakesh Sharma]

Query :- Is it possible to pay sitting fee twice for a Director who has attended the Original Board Meeting and Adjourned Board Meeting ?

As per my view Sitting fee is payable to the directors for the meeting attended by him. For this purpose "attend" is interpreted as "to be present at the meeting of the Board with a view to participating in its proceedings”. Then, what is to be the description in the accounts for the sitting fee, for a meeting, which was never held at all? Although the member did attend, and he can duly be paid the re-imbursement of the travelling expenses or maybe, even for his time, can he actually be paid 'sitting fees' for a meeting that he never 'sat through'? "Come to attend" is different from "attending" a meeting. 

Relevant Extracts of Section 197 of the Companies Act, 2013

(5) A director may receive remuneration by way of fee for attending meetings of the Board or Committee thereof or for any other purpose whatsoever as may be decided by the Board: 

Provided that the amount of such fees shall not exceed the amount as may be prescribed - [Rule 4]:

Provided further that different fees for different classes of companies and fees in respect of independent director may be such as may be prescribed -  [Rule 4] .

There can be no question of sitting fees for a meeting, which did not or could not take place. Director would be entitled to claim reimbursement of expenditure incurred by him in arriving at meeting venue and returning - including for stay in between. Sitting fee is not a benefit, which is being denied to Directors who have come to attend the meeting that got adjourned for want of quorum. It is for attending the Board meeting. 

It is one of the duties of the Director to attend a board or committee meeting. When he comes to attend a meeting he does not know whether there will be a quorum or not. By attending to the board meeting (which could not be held for want of quorum) Director has performed his duties and he should be paid not only sitting fees but also travelling allowance, halting allowance etc. If this principle were not followed then, the director first would like to confirm whether there is likely to be a quorum at the board meeting. It will be great inconvenience to the Director. Performance of one director cannot be linked or dependent on the performance of other director. Hence, payment of sitting fee should be irrespective of the presence of quorum.

Regards,

R C Sharma