Inter company business transactions

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Aashish M Deshpande (Querist)
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02 December 2011 Sir, I Would Like to know whether there is any restriction on inter corporate business transactions such as sale/ purchase between related parties companies.
I know requirements for inter-corporate debts and investments. I was only interested in inter-corporate normal business transactions between related parties of any amount.

Regards

CS Ankur Srivastava

CS Ankur Srivastava (Expert)
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02 December 2011 There are some restrictions so that insider or limited persons cannot take advantage of their position.

First of all, director have to issue a general notice to the company that he should be considered interested in the following body corporates or firms if the company enter into any transaction with those bodies corporate.

Secondly, if the transaction falls under section 297 there are strict compliances.

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Aashish M Deshpande

Aashish M Deshpande (Querist)
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02 December 2011 Yaa Thanks Sir,

Well the transaction would not fall u/s 297, since the transactions are between two Public ltd companies. So, I think only disclosure of interest by directors is enough...

regards

CS Ankur Srivastava

CS Ankur Srivastava (Expert)
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02 December 2011 Section 297 is applicable to 2 public companies.

It is not applicable on the transactions between:

Public and Private
Private and Private

Aashish M Deshpande

Aashish M Deshpande (Querist)
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02 December 2011 Sir, I as I Reading I think Sec 297 shall apply only if the contract is entered between the company and any of the following persons
1. A Director
2. A Relative of any director
3. A Firm in which such director or relative is partner
4. any other partner in such a firm
5. A Private Company of which director is a member or director.

That clearly means a contract between two Public Companies does not fall u/s 297..

Sir,
Kindly Clear the position.

Regards.

Charu Srivastava

Charu Srivastava (Expert)
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02 December 2011 Here i beg to differ from Mr. Ankur Section 297 does not apply to transactions between two public Companies.

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Aashish M Deshpande

Aashish M Deshpande (Querist)
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02 December 2011 MS Charu .. I agree with you... thanks..
I think now the query is resolved.

CS Ankur Srivastava

CS Ankur Srivastava (Expert)
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02 December 2011 Oh! Sorry Guys...
I wrote just opposite position.

Public and Private
Private and Private

The above companies need to comply section 297 however, on the transaction between 2 public companies Section 297 does not apply.

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