company has given advance to director against acquistion of land and advance given to a sister concern against purchase....
is it violation of companies Act
4 Replies
(Guest)
As per notification G,S.R. 464(E)
Section 185 pertaining to loans to directors and other persons in whom the director is interested shall not apply to a private company:
In whose share capital no other body corporate has invested any money;
If the borrowings of such a company from banks or financial institutions or any body corporate is less than twice of its paid up share capital or fifty crore rupees whichever is lower; and
Such a company has no default in repayment of such borrowings subsisting at the time of making transactions under this section.
(Guest)
The director shall disclose his interest or concern in such contract or arrangement entered or proposed to be entered by company/bodycorporate. please refer sec 184(2) of companies act,2013.
Section 184(2) shall apply If a director is interested/concerned in a contract or arrangement or proposed contract or arrangement entered or to be entered into with a company or bodycorporate in which such director along with other directors of that company entering into contract, holds more than 2% of shatreholding in that company/bodycorporate or
-if such director is Promoter or whole time director or Manager or in case if a contract is entered or to be entered in to with a firm , if such director is a partner, member or owner of such firm.
The director shall disclose his interest or concern in such contract or arrangement entered or proposed to be entered into in a board meeting in which such contract or arrangement is discussed for firsttime.
However as per sec 184(3) the contract or arrangment shall be voidable at the option of the company if the interested director does not disclose his interest or concern or participates in a meeting(Sec 184(2) applies to Pvt Ltd Company with an exception that In case of Pvt Ltd Company the interested director can participate in board meeting only after making disclosure of the same.)
As per Sec 184(4) In case of contravention of sec184,
Inprisonment upto 1Year or fine which shall not be less than rs.50000/- but may extend upto 100000/- or both.
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