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Shareholders Resolution Increase Sitting Fee for Board Meeting

special resolution for increase in sitting fees for board meetingA director of a company may be paid fees for attending meetings of the Board of Directors or a committee thereof in which he is a member.

The provisions regarding sittings fees payment is prescribed under sub-section (5) of section 197 of the Companies Act, 2013.

The amount of such sitting fees is decided by the Board of Directors in its meeting, however the fees amount shall not exceed Rupees 1 lakh per meeting as prescribed under Rule 4 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014.



SAMPLE #1
(In case the sitting fees amount prescribed in the Articles is less and therefore, to increase the amount)

#. Alteration in the Articles of Association for payment of Sitting fees to directors.

To consider and, if thought fit, to pass with or without modification(s), the following Resolution as a Special Resolution:

“RESOLVED THAT pursuant to the provisions of sections 14 and 197(5) of the Companies Act, 2013 read with Rule 4 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 and other applicable provisions, if any, the consent of the Members of the company be and is hereby accorded for alteration of the Articles of Association of the company as follows:

The existing Clause no. ... of the Articles of Association of the company be and is hereby deleted and the following new Clause no. ... be and is hereby substituted in lieu of the deleted Clause:

.... The company may pay sitting fee to its Directors except Executive Directors such sum as may be decided by the Board of Directors for attending meetings of the Board or a committee thereof, which shall not exceed Rs. 1,00,000/- (Rupees one lakh only) per meeting of the Board or a committee thereof, attended by a director.

RESOLVED FURTHER THAT the Board of Directors of the company be and is hereby authorized to do all such acts, deeds and things as may be necessary to give effect to the foregoing resolution.”



Explanatory Statement pursuant to Section 102 of the Companies Act, 2013

Item No. : ....

In accordance with the provisions of section 197(5) of the Companies Act, 2013 and Rule 4 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, a company may pay sitting fees to its directors for attending meetings of the Board or a committee thereof.

The sum of sittings fees as may be decided by the Board thereof shall not exceed Rs. 1 lakh per meeting of the Board or a committee thereof.

The sitting fees payment to Independent Directors and Women Directors shall not be less than the sitting fee payable to other directors.

Currently, as per Article ... of the Articles of Association of the company — a Director may be paid a sitting fee of Rs. ............/- (Rupees ...................... Only) per meeting of the Board or a committee thereof as attended by him/her.

In consideration of the increased pressure on the non-executive directors of the company to attend and contribute their invaluable advice and suggestions for the growth of the company as you are aware your company continues to expand and diversify its activities, the Board has proposed to increase the sitting fees amount and payment thereof up to an amount not exceeding Rs. 1,00,000/- (Rupees One lakh only).

Pursuant to section 14 of the Companies Act, 2013, members' approval by way of passing of a special resolution is required for alteration of the Articles of Association of the company. Accordingly, consent of the members of the company is sought for passing special resolution as set out at Item No. ... of the Notice.

The specimen of the amended Articles of Association is available for inspection by the members at the Registered Office of the company on all working days between 11.00 a.m. to 01.00 p.m., except Saturdays and Sundays, up to the date of the Annual General Meeting of the company.

All the directors, except the executive directors of the company, and their relatives are interested in the resolution set out at Item No. ... of the Notice. None of the executive directors, key managerial personnel or any of their relatives are, in any way, concerned or interested, financially or otherwise, in the resolution set out at Item No. ... of the Notice.

The Board commends passing of the special resolution as set out at Item No. ... of the accompanying Notice for approval by the members.


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SAMPLE #2

#. To increase the payment of Sitting Fees to Directors for every meeting of Board or a committee thereof

To consider and, if thought fit, to pass with or without modification(s), the following Resolution as an Ordinary Resolution:

“RESOLVED THAT pursuant to the provisions of sections 197(5) of the Companies Act, 2013, the sitting fees payable to the directors of the company be and is hereby increased from INR ............/- (Rupees .................... only) to INR ............/- (Rupees .................... only) with effect from (Date) for attending meetings of the Board or a committee thereof.

FURTHER RESOLVED THAT the Board of Directors of the company be and is authorised to do all such acts, deeds, matters and things as may be considered necessary, desirable or expedient for the purpose of giving effect to this resolution.”



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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. Medha Goel7/22/2019

    Very useful. Timely. Thanks a lot.

    ReplyDelete

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