30 September 2013
Can anybody please elaborate the Section 192 of the Companies Act, 2013 regarding Restriction on non-cash transactions involving Directors with the help of any Example because I am finding it difficult to understand the concept of this Section.
30 September 2013
Section 192 of the Companies Act, 2013
This is a new section and seek to provide for the manner in repect of regulation of arrangements between a company and its directors in respect of acquisition of assets for consideration other than cash. The clause provides that such arrangements shall require prior approval by a resolution in general meeting and if the director or connected person is a director of its holding company, approval is required to be obtained by passing of special resolution in general meeting of the holding company.
This section also provides the circumstances when an arrangement enters into by a company or its holding company in contravention of the provisions is voidable at the instance of the company.
- A company shall not enter in to any arrangement by which director of the company or its holding company or any person connected with him can acquire assets for consideration other than cash from the company & vice versa without the approval of the Company in general meeting.
- Where the director or connected person is a director of its holding company, the resolution from holding company will also be required.
- The expression person connected with the director has not been defined under the Act.
- The notice of approval in general meeting under this section in both the company and its holding company shall include particulars of the arrangement along with the value of assets duly calculated by Registered Valuer.
30 September 2013
Thanks a lot sir for your early reply but the line that I didn't understand is "arrangement between company and its directors in respect of acquisition of assets for consideration other than cash". Can you please elaborate this line and its very nice of you if you can explain this with any short of example to clarify.
03 June 2014
Sections 192 & 54 of companies bill 2013 are somewhere connected . That is ,54 should be complied with if the company is going to issue sweat equity shares to the directors or employees of the company whereas the section 192 is being with reference to a restriction imposed on directors while going to have any non cash transaction with the company , particularly acquisition of fixed assets by a company from the director or vice verse. So merely complying with provisions contained in section 192 may not be suffice while a transaction of non cash took place between director and company .Ie both 54 & 192 should be complied with .
03 June 2014
Thanks a lot sir for your reply, but how can section 54 and section 192 should both be complied with at the same time, can you further elaborate it with an help of an example.
03 June 2014
Section 54 is mainly focusing on issue of sweat equity for consideration other than cash and also mainly built up to have restriction on issue of shares as against service rendered or any assets exchanged whereas section 192 is mainly built up to restrict or regulate the non cash transaction ,particularly in the nature of purchase or sale of assets , between the director and company . I would say if any tangible asset is acquired by the company from a director for allotting shares as consideration ,section 192 should be complied along with section 54 . If there is an issue of shares mainly for rendering any intangible service as referred to in section 54 , then complying only with provision stated in section 54 would be enough
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