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Sitting Fees to Directors

Postby maslekar » Tue Jul 07, 2009 3:06 pm

A Public Limited Unlisted Company's Articles permit payment of Rs.5,000/- per director per meeting towards Sitting Fees. Now a Director refuses to accept the said sitting fees.? Can a Director refuse to accept?
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-V.Maslekar
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Re: Sitting Fees to Directors

Postby kirtiyeshu » Tue Jul 07, 2009 4:48 pm

Hi...
With ref. to S.309(2) of the Co Act, 1956, it is the company's discretion whether to pay or not to pay remuneration by way of sitting fees to the directors for attending the meeting/s of Board or Committee.

Remuneration/sitting fees can either be paid in terms of AOA or by way of a resolution in the general meeting, as the case may be.

However, a director can renounce his right to remuneration and his renunciation will bind him.(McConnell's Claim Re, London and Northern Bank (1901)). Directors may also agree with each other to accept less remuneration/no remuneration in future than they are entitled to and such agreement is binding on the directors. However this waiver is revocable by the director/s at any time and director's normal remuneration will be payable to him/them after he/they notify the company about their intention to claim it in future.

To conclude, Director has right to renounce his remuneration/sitting fees but let him intimate his intention in writing and place the same in the Board Meeting for its noting.

The relevant Article of AOA can also be amended to provide for director's discretion to waive the receipt of remuneration ,partially or wholly.

Regards,
CS Kirti
New Delhi
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Re: Sitting Fees to Directors

Postby Kumar Rakesh » Tue Jul 07, 2009 4:48 pm

Dear Mr.Maslekar,

According to me,if the concerned director not willing to accept the sitting fee then in that case obtain an undertaking signed by the concerned director on the appropriate stamp paper for any future claim from his side.

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Re: Sitting Fees to Directors

Postby kirtiyeshu » Tue Jul 07, 2009 4:57 pm

Stamp paper not necessary. Plain Paper will do since once he has communicated his intention of waiver of sitting fees, it is binding on him. Noting in Board Meeting is for a safer side on Company's behalf. This waiver to accept remuneration/sitting fees can be partial or whole, can be temporary or permanent; as intimated by the director. In case of partial or temporary waiver, director can in future reinstate his right of full remuneration.

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CS Kirti
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Re: Sitting Fees to Directors

Postby gagan75in » Wed Jul 08, 2009 1:56 pm

Hi,

I agree with the views expressed by Ms. Kirti. However, care should be taken in drafting while getting the requisite undertaking from the Director concerned (whether the intention of waiver is partial or whole; whether absolute or for a particular time period).Noting of the fact in the BM will keep the Company on a safer side.

With regards,

Gagan
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Re: Sitting Fees to Directors

Postby shailesh483 » Wed Sep 22, 2010 11:33 am

Dear Member

Can you provide me the format of waiver letter?

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Shailesh Goyal
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