Please advise whether special resolution is required for approving a contract for using immovable property of Managing Director on substantially increazed rent?
27 May 2011
In my opinion, the director should disclose his interest as required under section 299 of the companies act, 1956 if his shareholding exceeds 2% of the paid up capital of the company. Entry in the register of contracts in which directors are interested should be made as per section 301 of the companies act, 1956. Other than that no specific resolution is required.
Section 297 will not apply in this case as the contract is not for sale, purchase or supply of any goods, materials or services but letting out of immovable property. So no board approval or CG approval is required.
Other experts please clarify whether the transaction contemplated hereinabove attracts any section of the companies act requiring any board or general meeting resolution?
I find many companies referring even small matters to the Board and passing resolutions. However companies act doesn't mandate that.
Querist :
Anonymous
Querist :
Anonymous
(Querist)
30 May 2011
Thanks, it means in this case entry of contract in contract register is necessary but no Board resolution is mandatory.
CAclubindia
