The Ministry of Corporate Affairs has notified vide NOTIFICATION [F.NO. 17/75/2011-C.L.V], DATED 6-4-2011 enhancement in previous limit of Rs. Fifty thousand per month given under Rule 3 of Director’s Relative (Office or Place of Profit) Rules, 2003 to Rs. Two lakh fifty thousand per month for payment remuneration to relatives or partners of the directors of the Company falling under Section 314(1B) of the Companies Act 1956. By such notification, the amended rules may be called as Director’s Relative (Office or Place of Profit) Amendment Rules, 2011.
The effect of notification shall require Companies to obtain prior consent of the Company by a Special Resolution and approval of the Central Government under Section 314(1B) of the Companies Act 1956 read with Director’s Relative (Office or Place of Profit) Amendment Rules, 2011, with respect to appointment of:
1. Partner or relative of a director or manager; or
2. Firm in which such director or manager, or relative of either is a partner; or
3. Private company of which such director or manager or relative of either is a director or member,
to any office or place of profit which carries a monthly remuneration exceeding Rs. Two lakh fifty thousand per month.
The notification also redefined the constitution of Selection Committee under Rule 7 of Director’s Relative (Office or Place of Profit) Amendment Rules, 2011 for purpose of appointment of persons mentioned under Section 314 (1B) of the Act for Listed Companies, Unlisted Public Companies and Private Companies.
