02 December 2011
Sir, I Would Like to know whether there is any restriction on inter corporate business transactions such as sale/ purchase between related parties companies. I know requirements for inter-corporate debts and investments. I was only interested in inter-corporate normal business transactions between related parties of any amount.
02 December 2011
There are some restrictions so that insider or limited persons cannot take advantage of their position.
First of all, director have to issue a general notice to the company that he should be considered interested in the following body corporates or firms if the company enter into any transaction with those bodies corporate.
Secondly, if the transaction falls under section 297 there are strict compliances.
Well the transaction would not fall u/s 297, since the transactions are between two Public ltd companies. So, I think only disclosure of interest by directors is enough...
02 December 2011
Sir, I as I Reading I think Sec 297 shall apply only if the contract is entered between the company and any of the following persons 1. A Director 2. A Relative of any director 3. A Firm in which such director or relative is partner 4. any other partner in such a firm 5. A Private Company of which director is a member or director.
That clearly means a contract between two Public Companies does not fall u/s 297..
CAclubindia
