AGREEMENT BY A COMPANY TO PAY PENSION TO EX-DIRECTOR
The Companies Act, 2013 (“the Act”) and the Rules enacted thereunder are silent on the provision of the company paying a pension to its ex-directors.
However, by virtue of the articles of association (“AOA”), a company can allow the payment of pension to any ex-directors of the company. In addition to this, it can also provide for passing of a special resolution in place of an ordinary resolution. The Act does not make it mandatory for a company to have a Common Seal. However, if the AOA prescribes the affixation of Common Seal on such agreements, then the company should maintain a Common Seal and affix the same.
THIS AGREEMENT is made on_ (Day of Week), the(Day) day of (Month),(Year) BETWEEN(Name of the Company) having its CIN as(CIN), with its registered office at(Registered Office), (hereinafter referred to as “the Company”) and Mr. / Mrs. / Ms.(Name of the Individual), a resident of (Address), a former Director / Manager / Managing Director of the Company (hereinafter referred to as “Mr. / Mrs. / Ms. <name>”). WHEREAS(Individual) has well and faithfully served the Company as its Director / Manager / Managing Director for a period of(No. of Years) years; AND WHEREAS (Individual) has recently retired from office as a Director / Manager / Managing Director of the Company; AND WHEREAS the Company is authorised by its Articles of Association and in accordance of the rules of the Company to give pensions to any ex-officers of the Company; AND WHEREAS the Company has by ordinary resolution passed at an extraordinary general meeting of the Company held on (Month), (Day of Week), the(Day) day of (Year), determined to pay (Individual) a pension of Rs.(Amount in Rupees) per annum during the remainder of his life in recognition of such service as aforesaid. NOW, IT IS HEREBY AGREED as follows:
The Company hereby covenants with(Individual) that it shall pay to
him as from the (Day of Week), the (Day) day of (Month),(Year) during the remainder of his life, a pension at the rate of Rs.(Amount in Rupees) per annum payable by equal monthly instalments in arrear within the tenth day of each calendar month.
The pension hereby granted shall not be capable of being assigned to any one either in whole or in
In Witness: Common Seal of the Company (if any) Signature of the other party: Signature of the Authorised Representative (Company Secretary / Director / Manager / Managing Director)
Signature of the Individual (Ex-Director / Ex-Manager / Ex-Managing Director)
(Author: CS Rajat Agrawal, ACS is a Practising Company Secretary from Kolkata)
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