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Section 297 of companies act

CA Dhiraj Ramchandani (CA, M. com) (10823 Points)

19 November 2010

Similar to sec 295, here is section 297

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12 Replies

Ankur Garg (Company Secretary and Compliance Officer) (114773 Points)
Replied 19 November 2010

Really really appreciate the thinking...

I'll check the file and share my comments accordingly...

Keep sharing...Thanx

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Ajay Mishra (Company Secretary) (74337 Points)
Replied 20 November 2010

Very Good.........

Thanks for sharing these file.......

CA Dhiraj Ramchandani (CA, M. com) (10823 Points)
Replied 20 November 2010

@ ankur sir : sir it may not b complete, as my pc is out of order and doin all sch stuff from my cell... So, may b the file lacks complete information, like 297 doesn't include transactns related to immovable proprty, its nt mentioned in this file..... Actually wile preparing file on cell, my main aspect ws to give overall general knowledge regarding the section.... anyways, working for possible improvements.., and ur comments are always welcomed and appreciated... Thanx....

CA Dhiraj Ramchandani (CA, M. com) (10823 Points)
Replied 20 November 2010

@ ajay sir : thanx for recognition...

S.Jegadeesan (CA Student) (637 Points)
Replied 29 December 2010

Dear Sir,

Pl clarify whether Section 293 (1) d & 297 applicable to Pvt Ltd also?

Regards,

S.jegadeesan.

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Jayashree S Iyer (Company Secretary) (3224 Points)
Replied 30 December 2010

Section 293 applies to public company or a private company which is a subsidiary of a public company. Section 293 does not apply to a private company.

Section 297 applies to both. However transactions between two public companies are outside the scope of this section.

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Ajay Mishra (Company Secretary) (74337 Points)
Replied 30 December 2010

Agree with Jayashree....

S.Jegadeesan (CA Student) (637 Points)
Replied 30 December 2010

Dear Sir,

Pl clarify

Suppose Mr.raja is acting as director of M/s ABC Pvt Ltd & also M/s. Jai PVt Ltd.Both the companies are made the sales & purchase from each other.Is it require any Board approval?

Jayashree S Iyer (Company Secretary) (3224 Points)
Replied 31 December 2010

Yes. The transaction must be approved by the boards of both the companies.

If the paid up capital is >1 crore then CG approval is also required.

Ajay Mishra (Company Secretary) (74337 Points)
Replied 31 December 2010

APPLICABILITY OF SECTION 293

Though the Board of Directors has vast powers in the management of the company, however, there are certain powers which can not be exercised by the Board but are exercised only by a resolution at general meeting.

Section 293 lays down the powers mentioned in clause (a) to (e) of sub-section (1) which can not be exercised by the Board except with the prior consent of the company in general meeting by passing an ordinary resolution.

These restrictions are applicable only to public company or private company which is subsidiary of a public company. These restrictions do not apply to a private company.

SECTION 297 APPLIES TO:

All companies, public and private but not to contracts between two public company.
Contract for sale, purchase or supply of any goods, materials or services in which a director or any person connected with a director in any way mentioned in sub-section (1) of section 297 is interested.
Contract for underwriting subscripttions of any shares in or debentures of the company.
Oral contracts, if it can be proved by circumstantial evidence.

Regards

CS Ajay Mishra

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S.Jegadeesan (CA Student) (637 Points)
Replied 02 January 2011

Dear Sir,

Thanks for your reply.

Even Pvt Ltd also should get the approval if the Paid up capital exceed Rs.1 Crore?

Regards,

S.jegadeesan.

Jayashree S Iyer (Company Secretary) (3224 Points)
Replied 03 January 2011

Yes. When a private company or public company enters into a contract with another private company for sale or supply of goods or services, then CG approval is required. However when a private company enters into a contract with a public company, then the private company is not required to obtain the approval only the public company is required to obtain. Transactions between two public companies are outside the scope of Section 297.