Companies act - independent director

Kiran (Querist) 01 February 2013 This query is : Resolved
In case of a listed company...can company pay professional fees to one of its independent director (who is an Advocate by profession) for appearing on behalf of the company in court of law.

or for filing a suit against someone on behalf of the company.

Please advice.

Regards,
Kiran

Follow Query

Report Abuse

R.K Nanda (Expert) 02 February 2013
yes, it can pay.

Kiran (Querist) 02 February 2013
Dear Sir,

Thanks for your reply in the matter.

Can you please advise such payment will not violate clause 49 I A (iii)d which inter-alia stipulates

is not a partner or an executive or was not partner or an executive during the
preceding three years, of any of the following:
i. the statutory audit firm or the internal audit firm that is associated with the
company, and
ii. the legal firm(s) and consulting firm(s) that have a material association with
the company.

Regards,

Kiran

R.K Nanda (Expert) 02 February 2013
contact ur CA for it.

R.K Nanda (Expert) 02 February 2013
moreover, ur welcome.

Murali Krishna (Expert) 02 February 2013
S.49 of which Act you are referring to.

Kiran (Querist) 02 February 2013
Clause 49 of Listing Agreement

Taher (Expert) 02 February 2013
The Independent Director can appear for the company and can remit fees for the services but after disclosing to the Board at a meeting and consequently he shall ceased to be Independent as per prov of Sec299 of co Act also taking into prov of Listing agreement & AS standards.
U have to check whether whether the service remittance is within the ceiling limit as SCH VI, 298, 309 of Co Act.

Kiran (Querist) 02 February 2013
ya...that's my question...one can pay its fine but if on payment the person is going to lose his independence then its a problem.

hence long and short of the matter is that you should not pay such professional fees to an Independence Director.

right ??

Taher (Expert) 02 February 2013
It would be better if you Change the designation as Professional Director or else u can remit fees by way of Commission and hold Independence.
The other part is that the tenure of his service that too is important for Independency.

Kiran (Querist) 02 February 2013
this is a one time payment for one particular assignment that was handled. there is no regularity or practice that is followed.

one of transaction kind of thing...amount also not material (around lakh of rupees)

B.B.R.Goud. (Expert) 03 February 2013
yes, it can pay as the remuneration / consultation fee instead of any salary or something else...

Raj Kumar Makkad (Expert) 08 February 2013
I do endorse the advice of Taher.

Hemant Agarwal (Expert) 09 February 2013
It is conflict of Interest and hence lawfully untenable.

Also abuse of professional ethics.

Keep Smiling .... Hemant Agarwal

Kiran (Querist) 10 February 2013
Dear Friends and Exerts,

In stead of resolving my query you guys have confused me.

Everyone here are giving their personal opinion, in law either one can do a particular thing or one can't do it. There cannot be a situation like it is possible also but one should avoid.

if anyone has some supporting document which makes this point crystal clear then please share otherwise don't give your comments on this topic. consider this query as resolved.

Don't take me wrongly but this is my opinion on this matter.

Regards,
Kiran