Increase in director’s remuneration requires Government sanction ‑ Director rendering services ordinarily expected to be rendered by him ‑ Whether remuneration paid for services required approval of Central Government

Companies Must Get Central Govt Approval for Director Pay Hikes u/s 310 of Companies Act.

The circular emphasizes that any increase in a director's remuneration for services ordinarily expected to be rendered by them requires prior approval from the Central Government under section 310 of the Companies Act. It cites instances where companies paid directors substantial fees without such approval, highlighting a specific case involving professional fees paid to a director who was also a lawyer. The circular clarifies that companies must comply with sections 310 and 314, seeking approval before paying remuneration or appointing directors, as retrospective approvals will not be granted unless unavoidable circumstances are proven. Reasonable expense reimbursements are permitted without approval.