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Sec.297 of the Companies Act

M MOHAMED ABUBECKER SIDHICK (PRACTICING CHARTERED ACCOUNTANT) (28 Points)

11 February 2009

1. When provisions of section 297 of the companies act 1956 is applicable.

2. One private company having paid up capital of Rs.1.00 crore or more (Entire Capital held by foreign associate concerns) entering into contract with the foreign associate company. In such case provisions of section 297 is applicable or not. If applicable what are the procedures to be followed by indian private company.

3. If provision of section 297 is applicable for point no.2, central government approval is required or not. If central government is required when to be applied? where to be applied? which form to be used?

4. If one private company having paid up capital of Rs.1.00 crore or more entering into agreement with the another private company. In such case central government approval is required or not.

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J. Manivannan (Advocate & IP) (242 Points)
Replied 11 February 2009

Originally posted by :M MOHAMED ABUBECKER SIDHICK

1. When provisions of section 297 of the companies act 1956 is applicable.
2. One private company having paid up capital of Rs.1.00 crore or more (Entire Capital held by foreign associate concerns) entering into contract with the foreign associate company. In such case provisions of section 297 is applicable or not. If applicable what are the procedures to be followed by indian private company.
3. If provision of section 297 is applicable for point no.2, central government approval is required or not. If central government is required when to be applied? where to be applied? which form to be used?
4. If one private company having paid up capital of Rs.1.00 crore or more entering into agreement with the another private company. In such case central government approval is required or not.

Section 297 applies to all companies, public as well as private. However, it does not apply to the contracts where both the parties to the contract are public companies. The section would apply where one of the two companies (being parties to the contract) is a private company and the other is a public company, but in such a case, it will have to be complied with by the public company only.
Previous approval of the Central Government is required where the paid up capital of the Company is Rs. One Crore or more. (However, this power of giving approval has been delegated to the Regional Director at Kanpur, Bombay, Calcutta and Madras). The Application for approval shall be made to the concerned Regional Director in Form No. 24A prescribed under Companies (Central Government’s) General Rules & Forms, 1956 alongwith a certified copy of the contract and / or relevant papers.
The provision of section 297 does not apply in respect of the contract between two private Companies.

Thanks