When interest of director is to be check , only the shareholding of director in other company is taken under consideration , and not of his relative.
In your case Mrs X is director of XPL and not holding any share in YPL therefore she is not interested director , even thought her brother is holding share in the YPL , these is the loop hole of the section 299
therefore in my opinion in your case section 299 is not applicable
18 March 2010
But in that case Robin, why does form 24AA have an annexure of relatives.
As per my knowledge, Form 24AA is applicable as per Sec 299 and not 297. Though sec 297 makes a mention of relatives but no such mention is made of in Sec 299.
Also, I hope one need not give form 24AA if not covered under sec 299, though covered u/s 297.
Yes Sec 299 is applicable. Section 300 and 301 also applicable.
As Mr. Y, the director of YPL, is the relative of director of XPL with which his (Mr. Y) company is going to enter into the contract. Mr. Y should disclose his interest in the BM of YPL.
Sec 299(6) states that nothing in the section will apply where the director of a company individually or in combination with his co-directors hold 2% or less shares in the OTHER company with which it enters into contract
if he / she is any way, whether directly or indirectly, concerned or interested in any contract or arrangement or proposed contract or arrangement entered into or proposed to be enter into, by or on behalf of the company
here the relatives can be counted under Direct or indirect concern or interest
hence 299 will be applicable to this contract again 2% holding is for Director if he is holding directly any shares but as regards relatives no holding is specified
Section 299 applies to any contract or arrangement to which a company is party and in which a director is interested. This Section is wider in scope than Section 297, which refers to certain direct contracts only
Hence as per my knowledge 299 is applicable and section 297 is applicable as relative of Director is covered
and as per sechedule 1A point 19 brother is relative
hecnce it comes under 299 297 and 301 so you do need to make entry in register of members and capital of any one company is above 1 cr central govt approval is required
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