vivek (CS) (751 Points)
28 September 2010Dear All,
There are two Pvt. Ltd. Companies A and B. Mr. K is director in both the company. Suppose in Company A he is holding less than 2% shares (no other indirect shareholding) but he is MD of that company and in Company B he is holding more than 5%?
In this case for company A Sec. 299 will not attract in wake f Sec.299(6)? Will ection 297 apply?
Upto my understanding Sec. 297 will apply irrespective of his shareholding?
Thanks in anticipation of your reply?
Regards,
Ajay Mishra
(Company Secretary)
(74337 Points)
Replied 28 September 2010
With reference to section 299(6), it is the collective responsibility of all directors to disclose the nature of their interest, and if their holding together exceeds 2 % of the paid up capital of the other company, any contract oe aarrangement with that other company will come within the perview of this section. {Ciecular No. 8/16/061-PR dated 19th May, 1961}
As per the above circular please check that Mr. K and other directors together hold more than 2% of paid-up capital of Company A.
Regards
Ajay Mishra
(Company Secretary)
(74337 Points)
Replied 28 September 2010
Section 297 does not apply to:
1. Giving or taking loans.
2.Contract in respect of immovable property (as it is not 'good' ).{Letter No. 9/4190-CL-X dated 27.03.1990}.
3.Contract between two public Companies.
4.Contract of employment of director or managing or whole time director.[ Circuler No.8/11/75-CL-V dated 27.03.1975]
5.Contract for employment of relative of director.
6.Contract entered into by the company with the dealer on principle to principle basis. [Circuler No. FM 8/297/56-PR dated 02-08-1956]
7. Professional services of the nature given by firms of solicitors and advocates, etc.[circuler No. 8/11/75-CL-V dated 05.06.1975]
8.hiring of office premises on rent as the transaction is in immovable property. [Department Clarification dated 10-09-1990]
vivek
(CS)
(751 Points)
Replied 29 September 2010
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