17 December 2010
A private company having paid up capital of rs. 1 crore enters into transaction with another private co. and they have common directors so they are related parties. the another or opposite party is having paid up of less than 1 crore. so i think as per section 297 of Companies Act, 1956 if a private company having paid up capital of Rs. One Crore or more enters into a transaction with another private company whose paid up capital is less than Rs. One Crore, then former company needs to take prior Central government approval and board consent before entering into the said transaction/arrangement.But no such action took place.
so kindly advice me the consequences. Is it falls under Condonation for delay or Compounding of offences???????????
17 December 2010
Your case falls under Section 297 for which CG (delegated to RD) approval is required.
You have to apply to RD for approval of related party transactions.
However it's a case of continuing offence, hence first apply for compounding u/s 621A. Once compounding application is made, you can apply for approval simultaneously.
17 December 2010
Hi! One thing I forget. Section 297 is attracted only for entering into contracts for sale, purchase or supply of goods, materials or services. If the transaction is other than this viz., giving loans, etc. no need for CG approval.
17 December 2010
Penalty can be imposed u/s 629A and the same is compoundable u/s 621A. Then act according to the 1st reply otherwise the contract will become void.
17 December 2010
If the purchase of goods & materials from the company, or the sale of goods and materials to the company, by any director, relatives, firm, partner or private limited company for CASH at prevailing market price, then no needs to take prior Central government approval and board consent before entering into the said transaction/arrangement.
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