Can MD receive remuneration in Holding and subsidiary company's?

[Kiran T]

Dear All!

Can MD receive remuneration in Holding and subsidiary company's?

Both companies are subsidiary of public company.

Sec 309 (6) bars DIRECTOR of the company to receive remuneration or commission from the subsidiary if he/she is in receipt of COMMISSION in the company.

So according to my Interpretation, if a Director is in receipt of remuneration ONLY in holding company then director can receive remuneration or commission from the subsidiary company
and vice versa.

Is there any other provision or rule or case laws which can through light on this query?


Regards

Kiran.T

[Suresh Kumar Vaishraj]

Dear Mr. Kiran,

 

- As per Section III of part II of Schedule XIII to the Act, a managerial person shall draw remuneration from one or both Companies, provided that the total remuneration drawn from the Comapnies does not exceed the higher maximum limit admissible from any of the Companies of which he is a managerial person. 

- Thus, this means there is no bar drawing remun. from two companies, but the aggregate remun. should be within the maximum permissable limits of any one company under the Law.

 

Thanks and Regards,

Suresh Kumar V
Company Secretary
91-9849991201

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[Kiran T]

Dear Suresh

 

Thanks for your reply!

 

To further my query....

 

Sec 309(6) restricts the payment in two companies (in certain cases) and section III of part II of schedule XIII to the act allows payment with restrictions. How to understand  and conclude this?

 

My understanding goes like this.... in this circumstances we need to apply harmonious construction principle (interpretation) and can conclude that even though there is restriction under 309, by satisfying the schedule XIII requirements we can pay remuneration in both companies.

 

Pls correct me if i am wrong.

Regards

Kiran.T

[Suresh Kumar Vaishraj]

Agreed, as per section 309(6) there is a restriction on payment in case of holding and subsidiary.

 

- However, the section reads as "No director of a company, who is in receipt of any commission from the Company and .................". It is not using the words remuneration.

 

- Whereas the payment we make under schedule XIII is remuneration.

 

- As per the fair interpretation of these provisions, we should be able to pay remun. from both holding and subsidiary companies.

 

- Moreover, had there been any such restriction, then the same should have been expressly warranted under Schedule XIII also. May the legislature intents to allow such payments.

 

Views of other friends solicited.

[Vivek Aggarwal]

Dear Kiran

I agree with the views of Mr. Suresh.

 

Regards

CS Vivek Aggarwal

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From: Suresh Kumar Vaishraj <vsure...@gmail.com>
To: csmy...@googlegroups.com
Sent: Sat, 18 September, 2010 3:10:01 PM
Subject: Re: [CSMysore] Can MD receive remuneration in Holding and subsidiary company's?

[CS A Rengarajan]

Section 309 talks about remuneration also. Please don't read isolation  two components in section 309 one is commission and another is remuneration

regards

csarengarajan
Company Secretary, Chennai
email csaren...@gmail.com
mobile 093810 11200
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