05 April 2011
Is sole proprietorship outside the purview of this sec.....if transaction are entered between a public ltd. and sole propietorship where directors and sole propietor are relatives..will it attract this section???
A sole proprietorship firm has no seperate legal existence of its own. Hence, when a transaction is to be entered into between a Public Limited Company and a sole proprietorship firm of which a relative of the Director is the sole proprietor, it is in fact a transaction between a Public Limited Company and the relative of the Director. Hence, the provisions of section 297 will be applicable subject to the conditions and exemptions specified therein.
06 April 2011
Udit is right. Soleproprietorship is nothing different from the sole proprietor himself. So when a company enters into a contract with a relative of a sole proprietor who also happens to be the director of the company, Section 297 will definitely be attracted.
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