In context to sec. 297 and 299

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

14 December 2012 ROC raised the query for Non Filing Form no. 24A for the F.Y. 2011-12 after uploaded form no. 66.
And according to section 297 and 299 contract is not made between their companies/concern.
So now what is the solution?

Ajay Mishra

Ajay Mishra (Expert)
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14 December 2012 Hi

Please check in Compliance Certificate given by PCS that it has not mentioned that the provision of section 297 and 299 is applicable.

As per Para No. 9 of the Companies (Compliance Certificate) Rules, 2001, the Company Secretary while issuing compliance certificate is required to certify whether the company has duly complied with the provisions of section 297 of the Act in respect of contracts specified in that section.

Querist : Anonymous

Querist : Anonymous (Querist)

15 December 2012 In compliance Certificate point no. 19 is as below

The company was not required to obtained any approval of the central govt,Company law board,Regional Director,Registrar or such authorities.
And I think that if Co. paid-up capital is more than 1 crore so section 297 and 299 is applicable,So now what should I do?

Aashok Kumar Sharma

Aashok Kumar Sharma (Expert)
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29 July 2024 To address the issue regarding the non-filing of Form No. 24A and the applicability of Sections 297 and 299 of the Companies Act, let’s break it down into specific points and actions:

### **1. Understanding Sections 297 and 299**

- **Section 297 of the Companies Act, 1956 (repealed but relevant for historical context):** This section deals with the need for the company to obtain prior approval of the Central Government for entering into contracts with related parties if the value of the contract exceeds certain thresholds.

- **Section 299 of the Companies Act, 1956 (repealed but relevant for historical context):** This section requires the disclosure of interest by directors in contracts or arrangements entered into by the company.

In the context of the Companies Act, 2013, these provisions have been updated:
- **Section 188 of the Companies Act, 2013:** Deals with transactions with related parties.
- **Section 184 of the Companies Act, 2013:** Requires directors to disclose their interests in other entities.

### **2. Applicability and Compliance**

1. **Contract Approval Requirements:**
- If your company had transactions with related parties exceeding certain thresholds and the paid-up capital is more than ₹1 crore, you need to comply with the relevant sections for related party transactions.
- **Current Requirements:** As per the Companies Act, 2013, if your company’s paid-up capital is more than ₹1 crore, related party transactions should comply with Section 188 of the Companies Act, 2013, which includes obtaining board and, if necessary, shareholder approval.

2. **Non-Filing of Form No. 24A:**
- Form No. 24A is related to the compliance certificate under the Companies Act, 1956. If the ROC has raised a query about the non-filing of Form No. 24A for FY 2011-12, you must address this query.
- **Solution:**
- **Check the Status:** Ensure if Form No. 24A was indeed not filed or if there was an error. If it was an oversight, prepare to file the form immediately with the relevant fees and penalties for late filing.
- **File the Form:** Submit Form No. 24A online on the MCA portal with all necessary details. Provide explanations or justifications in the form or in an accompanying letter if required.

3. **Approval from Authorities:**
- If the contracts were related to transactions that fall under Section 297 and 299 of the Companies Act, 1956, it’s essential to verify if any prior approvals were required and whether they were obtained.
- **Current Framework:** For the Companies Act, 2013, ensure that all related party transactions are conducted following Section 188 and other applicable sections, which do not require prior government approval but must be disclosed and approved as per the Act’s requirements.

### **3. Steps to Resolve the Issue**

1. **Review Historical Compliance:**
- Verify if the company had complied with the provisions under the Companies Act, 1956 for the relevant financial year. Check if Form No. 24A was required and if it was indeed missed.

2. **File the Required Forms:**
- If Form No. 24A is indeed missing, file it immediately through the MCA21 portal. Pay any additional fees or penalties associated with late filing.

3. **Consult a Professional:**
- **Seek Expert Advice:** Given the complexity of compliance and historical requirements, consult with a company secretary or legal advisor who specializes in company law to guide you through the process and ensure that all necessary compliance requirements are met.

4. **Rectify Records:**
- Ensure that all related party transactions are documented and approved as per the current requirements of the Companies Act, 2013, if applicable. Maintain proper records and disclosures for future reference.

5. **Respond to ROC Query:**
- Prepare a detailed response to the ROC query explaining the situation, actions taken to rectify the compliance issue, and submit the required documentation.

### **Conclusion**

In summary, you need to address the ROC query by filing the required form and ensuring compliance with both historical and current company law requirements. Review all related party transactions, obtain any necessary approvals, and seek professional guidance to ensure proper compliance with legal obligations.

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