Prohibition against director holding ‑ Whether payment of guarantee commission or interest on loans to directors attracts sub‑section (1)

Clarification: Payments of guarantee commissions or loan interest to directors not covered by Companies Act Section 314(1).

The circular addresses whether payments of guarantee commissions or interest on loans to directors fall under section 314(1) of the Companies Act. It clarifies that section 314 applies only if a director holds a place of profit within the company, receives a monthly remuneration of Rs. 500 or more, and the remuneration is for services beyond typical director duties. Consequently, section 314 does not apply to payments of guarantee commissions or interest on loans to directors. The provisions of section 309 are also considered, but section 314 remains inapplicable under the specified conditions.