Section 202. Compensation for loss of office of managing or whole-time director or manager
(1) A company may make payment to a managing or whole-time director or manager, but not to any other director, by way of compensation for loss of office, or as consideration for retirement from office or in connection with such loss or retirement.
(2) No payment shall be made where the director resigns as a result of reconstruction or amalgamation and is appointed in the reconstructed or resulting body corporate; where the director resigns otherwise than on reconstruction or amalgamation; where the office is vacated under section 167(1); where the company is wound up due to the negligence or default of the director; where the director has been guilty of fraud, breach of trust, gross negligence or gross mismanagement; or where the director has instigated or participated in bringing about termination of his office.
(3) Any payment made under sub-section (1) shall not exceed the remuneration which the director would have earned for the remainder of his term or three years, whichever is shorter, calculated on the prescribed basis.
(4) Nothing in this section prohibits payment to a managing or whole-time director or manager for services rendered to the company in another capacity.
