Section 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 the transfer of the whole or any part of any undertaking or property of the company, or the transfer to any person of all or any of the shares in a company resulting from an offer to shareholders or an offer intended to make the company a subsidiary, or an offer intended to confer one-third of the total voting power, or any other prescribed offer, receive any payment by way of compensation for loss of office or consideration for retirement from office unless the prescribed particulars of the proposed payment, including the amount, have been disclosed to the members and the proposal approved by the company in general meeting.
(2) Nothing in sub-section (1) affects payment by a company to a managing director, whole-time director or manager by way of compensation for loss of office or consideration for retirement, subject to the limits and conditions of this Act.
(3) Where any payment is made in contravention of this section, the amount received shall be deemed to have been received in trust for the company.
(4) The provisions of this section are subject to the exceptions and conditions prescribed by the Act.
(5) If a director makes any default in complying with this section, such director shall be liable to a penalty of one lakh rupees.
