191. Payment to director for loss of office, etc., in connection with transfer of undertaking, property or shares
(1) No director of a company shall, in connection with—
(a) the transfer of the whole or any part of any undertaking or property of the
company; or
(b) the transfer to any person of all or any of the shares in a company being a
transfer resulting from—
(i) an offer made to the general body of shareholders;
(ii) an offer made by or on behalf of some other body corporate with a view
to a company becoming a subsidiary company of such body corporate or a
subsidiary company of its holding company;
(iii) an offer made by or on behalf of an individual with a view to his
obtaining the right to exercise, or control the exercise of, not less than one-third
of the total voting power at any general meeting of the company; or
(iv) any other offer which is conditional on acceptance to a given extent,
receive any payment by way of compensation for loss of office or as consideration
for retirement from office, or in connection with such loss or retirement from
such company or from the transferee of such undertaking or property, or from
the transferees of shares or from any other person, not being such company,
unless particulars as may be prescribed with respect to the payment proposed to
be made by such transferee or person, including the amount thereof, have been
disclosed to the members of the company and the proposal has been approved
by the company in general meeting.
(2) Nothing in sub-section (1) shall affect any payment made by a company to a
managing director or whole-time director or manager of the company by way of compensation
for loss of office or as consideration for retirement from office or in connection with such loss
or retirement subject to limits or priorities, as may be prescribed.
(3) If the payment under sub-section (1) or sub-section (2) is not approved for want of
quorum either in a meeting or an adjourned meeting, the proposal shall not be deemed to
have been approved.
(4) Where a director of a company receives payment of any amount in contravention
of sub-section (1) or the proposed payment is made before it is approved in the meeting, the
amount so received by the director shall be deemed to have been received by him in trust for
the company.
(5) If a director of the company contravenes the provisions of this section, such
director shall be punishable with fine which shall not be less than twenty-five thousand
rupees but which may extend to one lakh rupees.
(6) Nothing in this section shall be taken to prejudice the operation of any law requiring
disclosure to be made with respect to any payment received under this section or such other
like payments made to a director.