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Notice in form 24aa

Sarvesh (Company Secretary) (179 Points)

30 May 2013

Can anyone please clear me whether notice i.e form 24AA which shall be required to given u/s 299(3) should also disclose the details of societies/HUFs/Trusts in which a director is member. Please share your expert views on the same.

Thanks

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9 Replies

Shankar BA(Hons) (CS) (278 Points)
Replied 31 May 2013

Dear Sarvesh,

As per Section 297 & 299 (3) of Indian Companies Act, 1956 there is no seperate mentioning of declaration of membership or directorship in Societies / HUF / Trusts.

So there is no need for disclosing it to MCA.

But, as per Societies Act, they have to declare the same to the concerned Registrar of Societies.

With that in India each state has seperate Societies Act passed by their respective Legislative Assembly.

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Ankur Garg (Company Secretary and Compliance Officer) (114773 Points)
Replied 31 May 2013

You are advised to go through section 299(3) for the said query.

As per section 299(3) a general notice given to the Board by a director, to the effect that he is a director or a member of a specified body corporate or is a member of a specified firm and is to be regarded as concerned or interested in any contract or arrangement which may, after the date of the notice, be entered into with that body corporate or firm.

So ideally notice under form 24AA is limited to body corporate and specified firms. I would suggest you to not to use form 24AA for disclosing interest in societies/HUFs/Trusts.

In other words interest of director in societies/HUFs/Trusts required to be disclosed at the time of considering the contract and arrangement with societies/HUFs/Trusts (Each Time) and the facility of general notice is not available in case of societies/HUFs/Trusts.

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Sarvesh (Company Secretary) (179 Points)
Replied 31 May 2013

Dear Shankar,

The expression used in section 299(3)(a) is "member of a firm" rather than a partner of a firm. Perhaps to give a wider scope to such section the said term has been used in the section. On analyzing the expression it would seem that it will include members of all business firms whether they be partnership or not. e.g. HUF, Proprietary Concern or a charity.

Other members views are solicited please.

Sarvesh (Company Secretary) (179 Points)
Replied 31 May 2013

Thanks Ankur sir for your valuable reply and request you to please throw some light on what i have stated in above post.

Ankur Garg (Company Secretary and Compliance Officer) (114773 Points)
Replied 31 May 2013

As per my understanding read with the definition of body corporate u/s 2(7), societies/HUFs/Trusts are not covered in the term body corporate.

Further there is no point covering societies/HUFs/Trusts under the term firms used in section 299(3).

Further one time disclosure in case of interest in societies/HUFs/Trusts, would not be a sufficient disclosure u/s 299(1) and (2).

To conclude, going through the intention of law by creating an exception u/s 299(3) in case of body corporate and firms, I disagree with your observation that the language of section 299(3) include members of all business firms whether they be partnership or not. e.g. HUF, Proprietary Concern or a charity. However, you may wait for the opinion of other learned members.

Thanks

Ankur

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Sarvesh (Company Secretary) (179 Points)
Replied 31 May 2013

Sir i really appreciate your reply in this regard but my observation is based on a note given in A. Ramaiya (17th Edition 2010) part 2, page no-3792, and have its heading as Member of a firm.

Ankur Garg (Company Secretary and Compliance Officer) (114773 Points)
Replied 31 May 2013

I have no clue about what is written in A. Ramaiya. However you can go ahead with your understanding.

Thanks

P C Agrawal (Registered independent director Past Chairman of Aurangabad Chapter of ICSI Practicing Company Secretary at Aurangabad) (8229 Points)
Replied 01 June 2013

Relevant para from Ramaiya's commentray is reproduced below:

“Sub-section 3(a) while talking of general notice uses the expression ‘member of a firm’ rather than ‘partner of a firm’. In some other sections of the Act e.g. S.2(3) or S.314 the expression ‘a partner of a firm’ is used thereby implying a member of a partnership firm under the Partnership Act 1932. Taking into account the objects of S.299, it would seem that the expression ‘member of a firm’ in clause (a) has been especially used so as to give it a wider base and include members of all business firms whether they be partnership or not, e.g. a Hindu undivided family, a proprietary concern or a charity.”

‘Society’ however is excluded from the definition of the term body corporate u/s 2(7).

Unfortunately, Form 24AA has not been designed properly. If you want to make a comprehensive list of persons covered u/s 301, you can take declaration from directors in attached form.

Thanks

Attached File : 9367 1180999 declaration sec 301 general.doc downloaded: 470 times

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Ankur Garg (Company Secretary and Compliance Officer) (114773 Points)
Replied 01 June 2013

Thanks a lot Mr. Agrawal for sharing the explanation.

Indeed the explanation given in A. Ramaiya is quite convincing and logical. You can go ahead with the same. Sometimes ROC rejects interpretation given in top corporate books. However I am very hopeful that you won’t face such resistance from ROC in future.

All the best

3 Like