If MD of Public Ltd company want to sell his car to the companyin that case whether section 297 is applicable?
At present car is in MD's indiviual capacity. Can any one give me draft agreement for the same fro sell of car from MD to company?
shweta joshi- Naik (Employment) (57 Points)
29 March 2011If MD of Public Ltd company want to sell his car to the companyin that case whether section 297 is applicable?
At present car is in MD's indiviual capacity. Can any one give me draft agreement for the same fro sell of car from MD to company?
SANTOSH SHAH
(Company Secretary)
(754 Points)
Replied 29 March 2011
| Originally posted by : shweta joshi- Naik | ||
 |
If MD of Public Ltd company want to sell his car to the companyin that case whether section 297 is applicable? At present car is in MD's indiviual capacity. Can any one give me draft agreement for the same fro sell of car from MD to company? |
 |
Hi Shweta
In my opinion section 297 will be applicable.
But any sale or purchase to a company will require consent of the Board at the meeting and board resolution
to that effect.
If the Paid up share capital is above 1 crore then Central government approval is required ( Sec. 297 (1))
Also as per Sec 297 (3), sale is possible without consent on urgent basis to company above value of
Rs.5000/-, however before entering of any such contract , board consent (by resolution) be accorded within
3 months ofdate of contract entered into.
Section 297 (3):-
" (3) Notwithstanding anything contained in sub-sections (1) and (2) a director, relative, firm, partner or private company as aforesaid may, in circumstances of urgent necessity, enter, without obtaining the consent of the Board, into any contract with the company for the sale, purchase or supply of any goods, materials or services even if the value of such goods or cost of such services exceeds five thousand rupees in the aggregate in any year comprised in the period of the contract; but in such a case, the consent of the Board shall be obtained at a meeting within three months of the date on which the contract was entered into.
Other views / Experts views solicited.
regards
Santosh Shah
shweta joshi- Naik
(Employment)
(57 Points)
Replied 29 March 2011
| Originally posted by : shweta joshi- Naik | ||
|
|
If MD of Public Ltd company want to sell his car to the companyin that case whether section 297 is applicable? At present car is in MD's indiviual capacity. Can any one give me draft agreement for the same fro sell of car from MD to company? |
|
But whether "goods" covered under section 297 include, "car" which is an asset...
SANTOSH SHAH
(Company Secretary)
(754 Points)
Replied 29 March 2011
| Originally posted by : shweta joshi- Naik | ||
|
|
Originally posted by : shweta joshi- Naik If MD of Public Ltd company want to sell his car to the companyin that case whether section 297 is applicable? At present car is in MD's indiviual capacity. Can any one give me draft agreement for the same fro sell of car from MD to company? But whether "goods" covered under section 297 include, "car" which is an asset... |
|
Hi Shweta
Definition of Goods as per Sale of Goods Act 1930.
Goods - “Goods” means every kind of movable property other than actionable claims and money; and includes stock and shares, growing crops, grass, and things attached to or forming part of the land which are agreed to be severed before sale or under the contract of sale. [section 2(7)].
So car should fall under that definition. No doubt once car is sold to company it will be an asset .
Experts please advice, if am wrong.
regards
Santosh Shah
shweta joshi- Naik
(Employment)
(57 Points)
Replied 29 March 2011
| Originally posted by : shweta joshi- Naik | ||
|
|
If MD of Public Ltd company want to sell his car to the companyin that case whether section 297 is applicable? At present car is in MD's indiviual capacity. Can any one give me draft agreement for the same fro sell of car from MD to company? |
|
Sir and if MD is selling car at prevailing market price then it will come under exemption stated under 297
SANTOSH SHAH
(Company Secretary)
(754 Points)
Replied 29 March 2011
| Originally posted by : shweta joshi- Naik | ||
|
|
Originally posted by : shweta joshi- Naik If MD of Public Ltd company want to sell his car to the companyin that case whether section 297 is applicable? At present car is in MD's indiviual capacity. Can any one give me draft agreement for the same fro sell of car from MD to company? Sir and if MD is selling car at prevailing market price then it will come under exemption stated under 297 |
|
Hi Shweta
If the car is being sold at prevailing Market price then it should attract the exemption stated under Sec 297 (2)(a)
297(3) will attract where it is on urgent basis, and md enters into contract with company, board approval within
3 months required for same case, as the market value will be more than 5000/- Rs.
Experts your views solicited
regards
Santosh Shah
CS GK Murty
(Company Secretary)
(225 Points)
Replied 29 March 2011
I agree with Mr. Santosh. Since the transaction is falling within the purview of sec 297(1), board's approval is required and form 24A be filed with ROC along with attachments i) grounds for making application, MOA, AOA, copy of Agreement, Board's resolution to RD provided the paid up cap is more than Rs. 1 crore.
Expert views are solicited.
Live class on PF & ESI Enrollment & Returns Filing(with recording)
CAclubindia
