Page 66 - DCOM204_AUDITING_THEORY

Auditing Theory

Notes 4.2.10 Procedure for Appointment on Office or Place of Profit, where CG
approval required

If a company appoint a director or concerned persons on office or place of profit on a total
monthly remuneration of ` 50,000 or more, it has to obtain consent of the members of the
company by way of special resolution in GM and with the prior approval of the Central Govt.
for the first time after the holding of such office. The following procedure has to be complied
with:

1. Hold a Board meeting & consider appointment u/s. 314 and approve notice for convening
general meeting for passing special resolution by the members. Explanatory statement
with full particulars has to be sent to the members with the notice of the meeting;
2. Obtain approval of selection committee (as per rules) for appointment of relative to office
or place of profit before getting approval of members in general meeting;

3. Hold a general meeting and pass a special resolution for getting approval to the
appointment under section 314(1) or (1B);
4. Particulars of such appointment shall be filed with the Registrar of Companies within
thirty days of the passing of special resolution in the e-Form 23 u/s. 192 along with the
copy of such resolution and prescribed fees;

5. Prepare and file an application to the Central Government for its approval in the e-Form
24B along with prescribed fee;
6. The Central Government may vary the terms and conditions of appointment while
according its approval. On obtaining approval from the Central Government, the company
should enter into a contract with the concerned person.

Task Does the appointment of director to the office of secretary also require CG approval?

4.2.11 Documents and Particulars to be Furnished in the Application to
the Central Government

The following information shall be given in the application:
1. An undertaking from the appointee that he/she will be in the exclusive employment of
the company and will not hold a place of profit in any other company.
2. The monetary value of all allowances and perquisites and of total remuneration package
(monthly/annually) proposed to be paid to the appointee and details of the services that
will be rendered by him to the company.
3. Shareholding pattern particularly the shareholding of the directors along with his/her/
their relatives, the public holding, institutional holding (each institution separately).
4. The educational qualification/experience, pay scale, allowances and other benefits of
similarly placed executives. In case of the appointment of a relative, then, an undertaking
from the director/Company Secretary of the company that the similarly placed employees
are getting the comparable salary shall also be enclosed along with the application.
5. List/Particulars of all the employees who are in receipt of remuneration of ` 50,000 or
more per month.

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