Live Course on Drafting of Appeal and Reply of Penalty Notice by CA Sachin Sinha. Register Now!!

Disclosure u/s 299- co.s act, 1956

Angel (Trainee) (37 Points)

14 March 2013

Hi,

Is Director required to disclose the directorship in foreign Co.s also in Dissclosure u/s 299?

Kindly provide the provision where it is written

Reply
Follow
Share

7 Replies

Ankur Garg (Company Secretary and Compliance Officer) (114773 Points)
Replied 14 March 2013

As per section 299(1) every director of a company who is in any way, whether directly or indirectly, concerned or interested in a contract or arrangement, or proposed contract or arrangement, entered into or to be entered into, by or on behalf of the company, shall disclose the nature of his concern or interest at a meeting of the Board of directors.

There is also provision of general notice of interest u/s 299(3). If a director has given this general notice he/she would not be required to disclose interest at each contract or arrangement with the corporate body or firm, mentioned in said general notice.

So it is advisable to give general notice in the board meeting about that foreign company.

Angel (Trainee) (37 Points)
Replied 15 March 2013

Co. has been showing the details of only Indian Co.s and Auditors have never raised any objection on this. So, from this onwards, should we disclose this in Form 24AA?

Shankar BA(Hons) (CS) (278 Points)
Replied 15 March 2013

Miss Angel,

Your second question is not clear. But from now onwards (compulsorily) the Director has to disclose the interest in all Companies including Overseas in Form 24 - AA, Section 299.

Angel (Trainee) (37 Points)
Replied 15 March 2013

I meant to say that Directors of the Company have never shown the interest in Overseas Co. before and even Auditors have never raised any issue for not including the disclosure for foreign Co.s in Form 24AA

Ankur Garg (Company Secretary and Compliance Officer) (114773 Points)
Replied 15 March 2013

Disclosure under section 299(3) via general notice is an optional one. It is basically to avoid disclosure at each and every transaction.

However if your company enters into any contract with that foreign co., disclosure u/s 299 will be must.

Angel (Trainee) (37 Points)
Replied 15 March 2013

The Director in Indian Co. is also a director in its wholly owned subsidiary (WOS)say: WOS in Europe or Germany. In that case, will the disclosure be required?

CA Deepak Rathore (EXPERT) (281 Points)
Replied 15 March 2013

yeah , Required

In various Company law cases it has been laid down that the main purpose of this S.299 and its wide sweeping powers is to assuare fairness in dealing between directors and their companies and not to prohibite the ordinary right to contract.
The directors stand in a position of trustees, and the general rule provides that no one who has a duty to perform shall place himself in a situation in which his interest conflicts with his duty and he must not make profit by the trust.[Ramakrishna Rao v.Bangalore Race Club, Ramaswami Iyer v. Madras Times Printing, etc].