CMA Final · Corporate and Economic Laws · Prevention of Oppression and Mismanagement
Under section 202 of the Companies Act, 2013, compensation for loss of office may be paid by a company to:
Compensation for loss of office can be paid only to a managing director, whole-time director or manager, and not to any other director. Even then it is barred in cases such as voluntary resignation or fraud and gross mismanagement.
- AAny director of the company
- BA managing or whole-time director or manager, but not any other directorCorrect
- COnly a director who resigns voluntarily
- DOnly a director who is guilty of gross mismanagement
Explanation
Section 202(1) permits payment to a managing or whole-time director or manager, but not to any other director. Payment is barred where the director resigns otherwise than on reconstruction or amalgamation, or is guilty of fraud, breach of trust or gross mismanagement.
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