02 February 2011
A private company which is subsidiary of public company, makes preferential allotment of preference shares to a public company. Whether provisions of section 297 will apply?
02 February 2011
Section 297 applies for transactions involving sale, purchase or supply of any goods and materials or services and for underwriting the subscription of any shares in or debentures of the company. The transaction cited by you will not attract Section 297.
However Section 299 i.e. disclosure of interest by director, will apply if any of the directors of your company or two or more of them together holds more than 2% of the paid up share capital in the other company. Similarly Section 300 i.e. interested director not to participate or vote in Board's proceedings, will also be applicable as yours is a private company which is a subsidiary of a public company.
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