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Author Topic: Is it compulsaory to pay to the directors, who has left us informally?  (Read 2219 times)

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Offline HB

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My company (dealing in export on IT related stuffs) had three directors, me holding 45% share, my brother holding 45% share, and I gave 10 percent to one of our senior engineer Mr A, whom I was not paying as per industry standard as my company was a  startup 2 years back when we started, and we were not making profit(we are still in loss). As a compensation I think 10% share in addition to his basic salary was more than enough. Before making him one of the directors, he was just an employee, and we paid him as an employee only.

Mr A. however left us after three months of joining without informing us in written, he just called us one day from home and said he  is joining some company in USA, so he will not continue.  His unprofessional attitude cost us heavy on our ongoing projects at that time.  No notice period was given to us.

Since the last 2 years, I am trying to cancel his name from directorship, but I am unable to connect with him and talk on this matter. Also I have been a little bit careless also on this issue.

This guy Mr A is now back in India, and he is after me asking for "some compensation as the company used his name as a director."

My questions are as follows:

1- We were paying him as an employee, not as a director. We did not had any agreement on payment issue as a director, except share of 10%. Now is there any legal basis on which he can demand compensation? Also he never invested a single rupee.

2-  Last two years since he left we have incurred mostly losses, no profit at all. All the investment by me and my brother. The company is going in loss every year.  Given these facts are there any legal obligations to pay any amount to Mr A?   

3- Can legally he be a director of our company and work in some other company at the same time? (He is working in some other company, and his name is as a director in our company. ) Also keep in mind that he left us without any notice period causing us heavy damage.     

I will appreciate if someone can provide answers to these queries.

Thanks in advance for replying.         


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