purshase of shares from the director

This query is : Resolved

Raghupathy M (Querist)
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10 August 2009 Please advise us on the following:

There are two Public Limited Companies viz. Company A and Company B.
Mr.X is a Director of both these Companies and holding 50% of
shareholding in Company B.

To make Company B, a subsidiary of Company A, Company A want to purchase
the majority of shares held by Common Director in Company B at the price
arrived by Statutory Auditor.

The above transaction is within the limit prescribed by Sec.372A of
Companies Act and Company A passed unanimous resolution at its Board
Meeting.

Whether approval under Sec.297 or any other section of Companies Act is
required.

Jagruti (CS)

Jagruti (CS) (Expert)
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13 August 2009 Only Section 292(1)(d),299 & 300 will affect:
For 292(1)(d)- such investment should be within the limits.
Sec 299 - Director must have placed before director his holding as it is above 2 %
Sec 300 - He should not participate in the Resolution & discussion being insterested.

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