Certain acts of mismanagement on the part of directors led the company to go for winding-up. Though these directors were appointed for a term of three years, they have served the company only for one year. Examining the

A company may make payment to a Managing Director or a Director holding the office of Manager or in the whole-time employment of the company by way of compensation for loss of office or as consideration for retirement from office or in connection with such loss or retirement in accordance with Section 202 of the Companies Act, 2013 other than the following circumstances- Where director resign from his office as a result of the reconstruction or amalgamation and appointed in a position in the reconstructed company or resulting company. Where the director resigns from his office. Where the office of director is vacated under Section 167(1) vacation of office; Where the company is being wound up, provided the winding up was due the negligence or default of the director. Where the director has been found guilty of fraud or breach of trust in relation to or gross negligence in or gross mismanagement of, the conduct of the affairs of the company or any subsidiary company or holding company thereof; and Where the director has instigated or has been taken part directly or indirectly in bring about the termination of his office. Any payment of compensation shall not exceed the remuneration for remaining period of his term or for three years, whichever is shorter calculated on average actual remuneration for the last three years. Where he held the office for a lesser period than three years, then calculation shall be made on that period. The section does not prohibit payment of any remuneration for services rendered by him to the company in any other capacity. Accordingly, In this the director's office is vacated as a result of winding of the company and has joined in the restructured company, he is not entitled to any compensation (Refer to Point No. (a). Since the company has been wound up because of mismanagement, the directors will not be entitled to any compensation. Since the directors have rendered some technical services, the directors shall be entitled for their remuneration as per the contract entered between the directors and the company.