16 October 2009
One of the director is holding 29% of the total paid share capital (also voting power to that extent)in M/s. ABC. He is also a director in M/s. XYZ in which he holds 1% of the total paid up share capital.Both the company are private limited company.
M/s. XYZ has granted loan to M/s. ABC. M/s. ABC is paying the interest on the same.
My query
Do the said transaction comes under purview of section 299 of the companies Act 1956?
16 October 2009
Nothing in Section 299 is applicable to any contract or arrangement between two companies, if any one or more of the directors of the one company together holds / hold 2% or less of the paid–up share capital in the other company. [Section 299 (6)].
This limit of 2% has to be taken either as an individual director’s holding or the aggregate holding of two or more directors. There fore section 299 is not applicable here in this case.
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