Director's Relative (Office or Place of Profit) Rules, 2011

Director's Relative (Office or Place of Profit) Rules, 2011

NOTIFICATION NO. G.S.R. 357(E), DATED 2-5-2011

In exercise of the powers conferred by clause (b) of sub-section (1) of section 642, read with sub-section (1B) of section 314 of the Companies Act, 1956, the Central Government hereby makes the following Rules in supersession of the earlier Notification No. GS.R. 89(E), dated 5-2-2003, namely:—

1. (1) Short Title and Commencement: (1) These rules may be called Director's Relative (Office or Place of Profit) Rules, 2011.

(2) They shall come into force on the date of their publication in the Official Gazette.

2. Applicability : These rules shall apply to all companies registered under the Companies Act, 1956 except as provided in these rules.

3. Approval of the Central Government in case of Appointment of Relatives, etc. of Directors : No appointment for an office, or place of profit in a company shall take effect unless approved by the Central Government on an application, in respect of:—

(a) Partner of firm or relative of a Director or Manager; or

(b) Firm in which such Director, or Manager of relative of either is a partner; or

(c) Private Company of which such Director or Manager or relative of either is a Director, or member, which carries a monthly remuneration exceeding, Rs. 2,50,000 p.m.

(d) An individual who is a relative of a Director, or Manager and is appointed as an Advisor or Consultant and paid remuneration including commission on periodical basis.

4. Selection of Relatives of Directors and Directors to Hold a Place of Office/Profit:—

(a) The selection and appointment of a relative of a Director for holding office or place of profit in the company with a salary exceeding Rs. 2,50,000 per month shall be approved by adopting the same procedure applicable to non-relatives and approved by a Selection Committee.

Explanation : For the purpose of the sub-rule, in the case of listed public companies, the expression "Selection Committee" means a committee, consisting at least three members, the majority of which shall be independent Directors and an outside Expert:

Provided that in case of unlisted companies, independent Directors are not necessary but outside experts should be there in the Selection Committee:

Provided further that in the case of private companies, Selection Committee is not necessary.

5. Procedure for Examination of Application : The application under rule 3 shall be examined with respect to the following, in addition to all other requirements under the Companies Act, 1956:—

(a) In the case of individual appointee, an undertaking from him that he/she will be in the exclusive employment of the company and will not hold a place of profit in any other company.

(b) 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.

(c) Details of shareholding pattern particularly the shareholding of the directors along with his/her/their relatives, the public holding, institutional holding (each institution separately) and the quantum of dividend paid by the company during the last three preceding financial years.

(d) Details of the educational qualification/experience, pay scale, allowances and other benefits of similarly placed executives.

(e) In case of the appointment of a relative, an undertaking from the Director/Company Secretary of the company that the similarly placed employees are getting the comparable salary.

(f) List and particulars of the employees who are in receipt of remuneration of Rs. 2,50,000 or more per month.

(g) The total number of relatives of all the Directors either appointed as Manager/Whole time Director, Manager or in any other position in the company, the total remuneration paid to all of them altogether as a percentage of profit as calculated for the purpose of section 198 of the Companies Act, 1956.

Will

Will is a document that can be revoked, modified or substituted by the person executing it at any point of time during his lifetime.

The will can be executed even on plain paper.

Registration of a will is not compulsory.

Once a will is registered it becomes a strong legal evidence.

The will has to be in writing and has to state that the person executing it is making it out of his own free will and in a sound disposing state of mind. 

Only Muslims are allowed to make “Oral Will”.

Will must be signed by the executor and has to be attested by at least 2 witnesses.

No stamp duty is payable on a will.

While registering the will the witnesses have to sign the register, maintained in the office of the sub-registrar.

The ‘Will’ be registered with that sub-registrar who has jurisdiction over the residence of the executor.

A will can be handed over to the registrar for safe custody.

A minor can’t make a will.

For a will to be valid a legatee; who is the beneficiary, should not be a witness.

Indian Succession Act 1925, clearly states that any clause that bequest a property on the witness is void.

Only last will, executed before the death of the testator is enforceable.

© Copyright 2013, Shreerang Ketkar, All rights reserved.

Investment in Property in India by Non Resident Indian [ NRI ]

From the time of the Foreign Exchange Regulation Act (FERA) regime Non-resident Indians (NRIs) are usually very apprehensive while purchasing immovable property in India, their home country. Now that the more sober act the Foreign Exchange Management Act (FEMA), is in place there is a reason to believe that NRI's can invest in Indian property market.

Type of property
The Reserve Bank of India (RBI) has issued a notification granting general permission to NRIs for purchase of residential or commercial property in India without obtaining any clearance from the central bank. Further more there is no restriction on number of residential or commercial properties NRI's can purchase. NRI's still cannot purchase agricultural land, plantation property and even a farmhouse. 

Funds
The payment for purchase of property can be made by way of remittance through banking channels from abroad or from money lying in their NRE / NRO or FCNR accounts. The money for purchase of the permitted properties has to come only through banking channels hence the payment cannot be tendered in the form foreign currency notes. NRIs can even raise funds through home loan in Indian rupees. EMI for the home loan can be paid either by direct remittance from abroad or from the money lying in NRE/NRO/FCNR accounts or out of the rent received from such property or money transferred to borrowers account from the account of relatives of such borrower. funds lying in the FCNR or NRE account can be a underlying security for the home loan. 

Ownership

The property can be owned either in a single name or jointly with another NRI. A joint owner can not be a permanent resident in India. 

If at the time of changing the status from Resident Indian to Non Resident Indian the person owns a property or even an agricultural land or a farm house the same will continued to be owned by him without any hassles.