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Q1. Whether Independent director can be paid remuneration by way of a monthly salary? According to u/s 149(9) of companies act, an independent director shall not be entitled to any stock option and receive any remuneration by way of a fee provided under section 197 sub section 5, reimbursement of expenses for participation in a board and other meeting and profit related commission as may be approved by the members. The independent directors do not actively participate in affairs of company but they are involved in the policy making and meetings of a company. Therefore, they [...]

Independent directors are individuals appointed to the board of directors of a company who are not part of the management team and do not have any material pecuniary relationships with the company. They are appointed to provide an independent perspective to the board of directors and to ensure that the interests of all stakeholders are taken into account. Regulatory Framework Governing Liability of Independent Directors Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements), Regulations, 2015 [SEBI LODR]: Regulation 25(5) of SEBI LODR states as follows, “An independent director shall be held liable, only [...]

Executive Directors / Whole Time Directors of Public Listed Company What are additional compliances that are required to be complied with for payment of remuneration to Whole Time Directors / Executive directors of the listed entity? Remuneration payable to Whole Time Directors / Executive directors of listed entities is mainly governed by the Companies Act 2013. Whereas SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 [SEBI LODR] does not govern much with respect to payment of remuneration. There is only one aspect where SEBI LODR governs the payment of remuneration i.e. payment of remuneration to the [...]

Non-executive Directors are directors who are not in whole time employment of the company. These directors are remunerated by payment of sitting fees, commission on profits and fees for rendering professional services. How much sitting fees can be paid to non-executive directors? With respect to payment of sitting fees Companies Act, 2013 states the that maximum sitting fee that can be paid to non-executive directors is Rs 100,000 per meeting. Meetings here include all types of committee meetings wherein non-executive directors are comprised of. What is the maximum amount of remuneration that can be paid to [...]

What is meant by remuneration? Clause 78 of Section 2 of the Companies Act, 2013 defines “Remuneration” which means any money or its equivalent given or passed to any person for services rendered by him and includes perquisites as defined under the Income-tax Act, 1961. What is the Maximum Managerial Remuneration payable by a Public Company? As per Section 197(1) the total managerial remuneration payable by a public company, to its directors, including managing director and whole-time director, and its manager in respect of any financial year shall not exceed 11% of the net profits [...]

Section 158 of Companies Act, 2013 states that every person or company, while filing any return, information or particulars as are required to be furnished under this Act, shall mention the Director Identification Number (“DIN”) in such return, information or particulars in case such return, information or particulars relate to the director or contain any reference of any director. In recent case of M/s. Premier Solution Private Limited, the order of adjudicating officer dated 7th September 2022 ROC Ahmedabad has imposed the penalty of Rs.6,00,000/- on Company and Directors for not mentioning the DIN in Financial [...]

Section 185 of the Companies Act, 2013 contains prohibition, restriction and exemption for providing Loan, Guarantee, and Security to the Directors of the Company and any of their relatives. The provisions of Section 185 are divided into four (4) clauses which are as hereunder: Section 185(1): Prohibition on providing Loan, Guarantee or Security Any Company cannot provide, directly or indirectly, any loan, including any loan represented by a book debt to, or give any guarantee or provide any security in connection with any loan taken by, any of the following persons: Any Director of the Company; [...]