M/s Star Health Specialties Limited owns a Multi-specialty Hospital in Chennai. Dr. Hamilton, a practicing Heart Surgeon has been appointed by the company as its non-executive ordinary director and it wants to pay him fee, on case to case basis, for surgery performed on the patients at the hospital. A question has arisen whether payment of such fee to him would amount to payment of managerial remuneration to a director subject to any restriction under the Companies Act 1956. Advise the company, which seeks to ensure that the same does not contravene any provision of the Companies Act, 1956.
As per section 309, remuneration payable to a director for rendering services in any other capacity shall also be covered in 'overall managerial remuneration'. However, remuneration paid for rendering services in any other capacity shall not be so included, if-
(i) the services are rendered in a professional capacity; and
(ii) the Central Government has expressed the opinion that the director concerned possesses requisite professional qualifications.
In the given case, M/s Star Health Specialties Limited intends to pay fees for surgery performed by Dr. Hamilton its non-executive director, on case to case basis. Such payment of fees shall amount to payment of managerial remuneration unless -
(i) the services are rendered by Dr. Hamilton in a professional capacity; and
(ii) the central Government has expressed the opinion that Dr. Hamilton possesses requisite professional qualifications.
The company is advised to make an application to the Central Government. Since Dr. Hamilton possesses requisite professional qualifications (since he is a qualified doctor), and it is proposed that Dr. Hamilton shall render the services in a professional (since the company intends to pay him fees on case to case basis) it is very much probable that the Central Government will express its opinion that the services are rendered in professional capacity by Mr. Hamilton possessing requisite professional qualifications. In such a case the fess paid by Star Health Specialities to Dr. Hamilton shall not be included in overall managerial remuneration and other limits of remuneration specified under the Act
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