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Board Resolution for Waiver of Sitting Fees Payment to Directors

The Directors of a company are generally paid some fees for attending a formal meeting of the Board of Directors of that company. These fees are called "Sitting Fees". Although most of the companies pay these kind of fees to their Directors for attending such board meetings, however there is no compulsion under the law for making such payments.

With reference to sub-section (5) of the Section 197 of the Companies Act, 2013, which states that "A director may receive remuneration by way of fee for attending meetings of the Board or a committee thereof or for any other purpose whatsoever as may be decided by the Board", the responsibility of fixing sitting fees amount is bestowed upon the Board of Directors.
board resolution for waiver of sitting fees

Further, Rule 4 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, limits the sitting fees payment to a director for an amount up to one lakh rupees per meeting of the Board or a committee thereof.

In most of the Companies, only the Non-executive Directors are paid sitting fees and not the Managing Director/ Executive Directors. Independent Directors and Women Directors are paid sitting fees at par with other directors.

Since, the payment of sitting fees is not mandatory:
1) the Board of Directors can decide to not-to-pay the sitting fees at their first meeting;
2) if the sitting fees are paid currently, then the Board can decide to stop such payment.

Templates of Board Resolution for Waiver of Sitting Fees Payment to Directors

SAMPLE #1

❝RESOLVED THAT in pursuance of the provisions of Section 197(5) of the Companies Act, 2013, read with Rule 4 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, and any other provisions thereunder as may be applicable, subject to Article .... of the Articles of Association of the company, the consent of the Board of Directors be and is hereby accorded for non-payment any kind of sitting fees to any of the directors of the company with effect from (Date) for every meeting of the Board of Directors or a committee thereof attended by them.❞

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SAMPLE #2
(no sitting fee - simple format)

❝RESOLVED THAT pursuant to the provisions of Section 197(5) of the Companies Act, 2013, and rules made thereunder, as amended from time to time, no sitting fees be paid to any of the directors of the company for attending the meetings of the Board of Directors or committee(s) thereof with effect from (Date).❞

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SAMPLE #3
(no sitting fee and no reimbursement of expenses)

❝RESOLVED THAT no sitting fees be paid and no reimbursement of traveling and such other expenses be made to any of the Directors of the company for attending the meeting of the Board of Directors or any committee thereof w.e.f. (date) until such time the Board decides otherwise.❞



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NOTE: The resolution sample(s) here is only for reference, to help you with drafting. Do refer the exact provisions of the Act, relevant rules framed thereunder and any other applicable laws to be able to not to miss out anything important while drafting.

Comments

  1. Rama Charana3/09/2019

    Thank you! It was useful for reference in drafting.

    ReplyDelete

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