21 March 2013
A Pvt. Company is taking on lease a property owned by a director. Please suggest the procedure,applicable sections and the resolution for it .
21 March 2013
Section 297 of the Companies Act 1956 requires board approval for entering into any contract or arrangement with the related parties. However this section will cover only transactions relating to sale, purchase or supply of any goods, materials and services or for underwriting the subscription of any shares in, or debentures of, the company. Further, there is a requirement to take central Governament approval if the company has more than one crore paid up capital.
21 March 2013
Section does not apply to a contract of immovable property (eg: purchase of land, building etc.), because the terms used is goods, materials or services – all are movables. Thus contract for movables only get attracted by the section, immovable properties contracts are excluded.
21 March 2013
Nothing to worry, just pass Board resolution and take the property on lease, and the director will be entitled to monthly lease rent as may be decided.
21 March 2013
since section 297 doesnt applies here. only board resolution is sufficient. after that a disclosure in related party transaction is required.
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