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Payment of sitting fees to Managing Director & Executive/Whole-time Director

The Companies Act, 2013 does not have any provisions restricting payment of sitting fees to Managing Director(MD) or Whole-time/Executive Director(WTD/ED). Therefore, they can be paid sitting fees for attending meeting of Board of Directors of a company.

Though generally the Managing / Whole-time Directors of companies are not paid any sitting fees for attending meeting of board of directors of the company. Mostly, this is because of the remuneration terms fixed for them by the board of directors and approved by the shareholders and also generally, the articles of associations of most of the companies contains an article which restricts payment of sitting fees to Managing / Wholetime Directors.

However, as there is no restriction in the companies act, the company can amend such article in the article of association by passing special resolution in the shareholder meeting for allowing payment of sitting fees to MD and WTD.

Limit on Sitting fees amount

A company may pay a sitting fee to a director for attending meetings of the Board or committees thereof, such sum as may be decided by the Board of directors thereof which shall not exceed Rs. 1 lakh per meeting of the Board or committee thereof.

Relevant provisions from the Companies Act & Rules:
(1) Sub-section (5) of the Section 197 of the Companies Act, 2013.
(2) Rule 4 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014.
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