Disclosure under sec 299 [Resolved]

This query is : Resolved

Kamal Lahoty (Querist)

30 July 2012 Dear All,

Section 299(6)read as "Nothing in this section shall apply to any contract or arrangement entered into or to be entered into between two companies where any of the directors of the one company or two or more of them together holds or hold not more than two per cent of the paid-up share capital in the other company"

My query is that whether two percent or more shareholding clause will include both public & private company or it is only applicable to public company.

Also if relative of Director also holds 2% or more shares in a company, whether the disclosure of that company (in which his relative holds 2% shares) is required by the Director.

CS Ankur Srivastava

CS Ankur Srivastava (Expert)

31 July 2012 Yes it is applicable to public and private companies both.

Shareholding of relative is not considered as interest.

Following are to be disclosed under section 299:

Name of Company Nature of interest
.......... Shareholder/ Director

Firms, HUF Member, Karta, or relative is karta

Kamal Lahoty

Kamal Lahoty (Querist)

31 July 2012 Dear Ankurji,

Thank you for your opinoin. however i have still one query

"Plain reading of section 299 (1) makes it clear that Interest include direct or indirect interest. So, if a relative is holding directorship or holding 2 % or more shares in a company. then the director is also interested."

Whether my above proposition is correct.

Pls reply

Ajay Mishra

Ajay Mishra (Expert)

31 July 2012 Hi

Please read this circular:
It is the collective responsibility of all directors to disclose the nature of their interest, and if their holding put together exceeds 2% of the paid up capital of the other company, any contract or arrangement with that other company will come with in the purview of this section. {Circular No.8/16/061-PR dated 19th May, 1961}.

As per my understanding this sub section will apply to both company private as well as public.

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