Office or place of profit - Prohibition against director holding - Prescribed limit under rule 10C of General Rules and Forms - Companies Law - Circular : No. 4 of 1992

Circular : No. 4 of 1992 [F. No. 3/9/92 ‑ CL ‑ V], dated 22 ‑ 4 ‑ 1992. Subject:- Office or place of profit - Prohibition against director holding - Prescribed limit under rule 10C of General Rules and Forms Section 314(1)(b) of the Companies Act, 1956, and the rules made thereunder provide that any partner or relative of a director, any firm in which such director or a relative of such director is a partner, any private company of which such director is a director or member, and any director or manager of such a private company, shall not hold any office or place of profit under the company carrying a total monthly remuneration of Rs. 3,000 or more except with the consent of the company accorded by a special resolution. Further, section 314(1B) of the Act provides that any partner or relative of a director or manager, any firm in which such director or manager or relative of either is a partner, any private company of which such a director or manager or relative of either is a director or member holding office or place of profit in the company which carries a total monthly remuneration of not less than Rs. 6,000 will require prior consent of the company by a special resolution and the approval of the Central Government. The said monetary ceilings have since been liberalised from Rs. 3,000 to Rs. 6,000 under section 314(1)(b) of the Act and from Rs. 6,000 to Rs. 12,000 under section 314(1B) of the Act, with effect from 26th March, 1992, vide Notification No. GSR 353(E), dated March 26,1992. This is being brought to the notice of all concerned with the functioning of corporate sector.