Applicability of Section 297

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Querist : Anonymous

Querist : Anonymous (Querist)

07 January 2011 In case of transaction between A Pvt. Ltd. & B Pvt. Ltd where both the companies have common nominee directors. The paid up capital for both the compnaies is also more than Rs. 1 crore and the value of transaction is also more than Rs. 5000 in a year.
Please advise whether Central Government approval is required in pursuance of section 297 of the act?

CS SIDDHARTHA BANIK

CS SIDDHARTHA BANIK (Expert)

07 January 2011 Hi,

As you have mentioned that both the companies are Pvt. Limited Company(A.Pvt. Limited & B.Pvt. Limited), hence, Sec 297 will not be applicable here.

Thanks,
CS Siddhartha Banik

Querist : Anonymous

Querist : Anonymous (Querist)

07 January 2011 Dear Sir,

Thanks for the response.

Please can you provide a reference of a clarification, notification or a case laws for this opinion. As act only refers to common directors.

Jayashree S Iyer

Jayashree S Iyer (Expert)

07 January 2011 Section 297 is very much applicable to transactions between two private companies having common directors.

Here the question is since the common director is a nominee diretor whether the provisions of Section 297 are applicable?

The Act doesn't specify any such exclusion. Hence I feel it's applicable to nominee directors and since the paid up capital is >1 crore CG approval is also required.

Querist : Anonymous

Querist : Anonymous (Querist)

07 January 2011 Thanks mam

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