Applicable to a subsidiary company

‘x’ is a whole-time director in ‘A Company Ltd.’
A Company Ltd.’ recently floated a wholly-owned subsidiary company called ‘B Company Ltd.’ for one of its diversification projects. Mr. ‘X’ has been appointed as an ordinary director on the Board I’)f the subsidiary company. There is a proposal to pay sitting fees to him as per the
guidelines applicable to a subsidiary company. Can Mr. ‘X’ who is a whole time director of ‘A Company Ltd.’ accept sitting fees from ‘B Company Ltd.’ which is its su\)sidiary company in view of the provisions of Section 314 of the Companies Act, 1956, which says that a director of the holding company cannot hold office pr place of profit under the subsidiary company?
It may be noted that under sub-section
(1) of Section 314 prohibition is against a director of the holding company holding an office or place of profit under the
subsidiary company. Only if the office held by the director of the holding company is an office or place of profit within the meaning of sub-section
(3) of Section 314, the prohibition contained in sub-section (1) of Section 314 would apply.
Let us now traverse the definition of ‘office or place of profit’ of Section 314. In case office or place of profit is held by a director, he would be deemed to be holding an office or place of profit under the company only if he obtains from the company anything by way of remuneration over and above to which he is entitled as such director.
In the instant case, Mr. ‘X’ is an ordinary director of ‘B Company Ltd.’ and is entitled to sitting fees under the Articles of Association of ‘B Company Ltd.’ and such sitting fees presumbly is in accordance with Rule lOB of the Companies (Central Government’s) General Rules and Forms, 1956.