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COMPENSATION FOR LOSS OF OFFICE OF MANAGING DIRECTOR OR WHOLE – TIME DIRECTOR OR MANAGER [SECTION 202]
A company may pay compensation for or in connection with loss of office or for retirement from office to a managing director or whole – time – director or manager.
No compensation in following cases –
(a) where director resign from his office as a result of the reconstruction or amalgamation and appointed in a position in the reconstructed company or resulting company;
(b) where the director resign from his office;
(c) where the office of director is vacated under Section 167 (1) vacation of office;
(d) where the company is being wound up, provided the winding up was due to the negligence or default of the director;
(e) where the director has guilty of fraud or breach of trust in relation to or gross negligence in or gross mismanagement of, the conduct of the affairs of the company or any subsidiary company or holding company thereof; and
(f) where the director has instigated or has taken part directly or indirectly in bring about the termination of his office.
Amy payment of compensation shall not exceed the remuneration for remaining period of his term or for three years, whichever is shorter calculated on average actual remuneration for last three years. Where he held the office for a lesser period than three years, than calculation shall be made on that period.
This section does not prohibit payment of any remuneration for services rendered by him to the company in any other capacity.
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