Discloser of interest by the director

This query is : Resolved

manoj mahimkar (Querist)
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16 October 2009 One of the director is holding 29% of the total paid share capital (also voting power to that extent)in M/s. ABC. He is also a director in M/s. XYZ in which he holds 1% of the total paid up share capital.Both the company are private limited company.

M/s. XYZ has granted loan to M/s. ABC. M/s. ABC is paying the interest on the same.

My query

Do the said transaction comes under purview of section 299 of the companies Act 1956?

REgards

Manoj

sunny bansal

sunny bansal (Expert)
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16 October 2009 Nothing in Section 299 is applicable to any contract or arrangement between two companies, if any one or more of the directors of the one company together holds / hold 2% or less of the paidâ€“up share capital in the other company. [Section 299 (6)].

This limit of 2% has to be taken either as an individual directorâ€™s holding or the aggregate holding of two or more directors. There fore section 299 is not applicable here in this case.

chetan soni

chetan soni (Expert)
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16 October 2009 But still the concern director needs to disclosed his interest in M/s ABC Pvt Ltd.

Ankur Garg

Ankur Garg (Expert)
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18 October 2009 Agree with chetan.

Never rely on section-299(6) as indirect interest is always there. Disclosure of interest is necessary in your case.

Aslo consider section 300.

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