Section 297 & 299
This query is : Resolved
02 May 2013
Hey plz any1 can explain me section 297 & 299 of companies act,1956
02 May 2013
Hi
Every company, whether private or public, shall keep a Register and enter therein particulars of all contracts or arrangements to which section 297 or 299 applies including contracts which are exempt under the provisions as under:—
(a) the date of the contract/arrangement;
(b) the name of the parties with whom the contract entered into;
(c) the principal terms and conditions thereof;
(For example when interested contracts covered by section 297 did not need the consent of the Board, the answer against this column may be "For cash at market prices")
(d) the date on which the contracts were placed before the Board;
(e) the names of directors voting in favour or against the contract or arrangement and name of those remaining neutral.
However, particulars of following contracts or arrangements need not be entered in the Register of contracts in which directors are interested:—
1. Any contract or arrangement for the sale, purchase or supply of any goods, materials or services if the value does not exceed Rs. 5,000 in the aggregate in any year;
2. Any contract or arrangement by a banking company for the collection of bills in the ordinary course of its business or to any transaction referred to therein;
3. Any transaction by a banking or insurance company in the ordinary course of business of such company with any director, relative, firm, partner of the firm referred to in section 297(2)(c) of the Act;
4. In the case of a company registered under section 25 of the Act, the Register is required to be maintained only in respect of contracts to which section 297(1)(3) apply.
Every company, whether private or public, shall keep a Register and enter therein particulars of all contracts or arrangements to which section 297 or 299 applies including contracts which are exempt under the provisions as under:—
(a) the date of the contract/arrangement;
(b) the name of the parties with whom the contract entered into;
(c) the principal terms and conditions thereof;
(For example when interested contracts covered by section 297 did not need the consent of the Board, the answer against this column may be "For cash at market prices")
(d) the date on which the contracts were placed before the Board;
(e) the names of directors voting in favour or against the contract or arrangement and name of those remaining neutral.
However, particulars of following contracts or arrangements need not be entered in the Register of contracts in which directors are interested:—
1. Any contract or arrangement for the sale, purchase or supply of any goods, materials or services if the value does not exceed Rs. 5,000 in the aggregate in any year;
2. Any contract or arrangement by a banking company for the collection of bills in the ordinary course of its business or to any transaction referred to therein;
3. Any transaction by a banking or insurance company in the ordinary course of business of such company with any director, relative, firm, partner of the firm referred to in section 297(2)(c) of the Act;
4. In the case of a company registered under section 25 of the Act, the Register is required to be maintained only in respect of contracts to which section 297(1)(3) apply.
02 May 2013
Section 299 casts a duty on a director for disclosure embedded in many provisions of the Companies Act, 1956. Accordingly, every director of a company who is, in any way, whether directly or indirectly, concerned or interested in a contract or arrangement, or proposed contract or arrangement, entered into or to be entered into, by or on behalf of the company, shall disclose the nature of his concern or interest at a meeting of the Board of directors.
1. Object of disclosure of interest
The directors are in a position of trustees under common law and they have a fiduciary relation towards the company and its shareholders, so as to ascertain whether he is acting for his own benefit or in any way prejudice to the interest of the company.
2. Disclosure of nature of interest whether direct or indirect
A director is said to be directly concerned or interested in a contract or arrangement, when he himself has personal interest in a particular contract or arrangement. Whereas a director is said to be indirectly concerned or interested when any of his relatives and associates has got personal interest in the particular contract or arrangement.
3. Disclosure of interest is applicable to all companies
The section is applicable to all companies. Therefore, all directors are required to give the notice of disclosure, in writing. It is equally applicable to the alternate director including the directors appointed by the financial institutions and the Central Government under section 408 of the Act.
4. Time for disclosure of concern or interest in a particular contract or arrangement
Every director of a company, who is in any way, whether directly or indirectly, concerned or interested in a contract or arrangement, or proposed contract or arrangement, entered into or to be entered into, by or on behalf of the company, shall disclose the nature of his concern or interest at a meeting of the Board of directors. Section 299(2) relates to the time of disclosure, which may be described as under, depending upon the status of contract. (Appendix 1)
In the case of proposed contract or arrangement, the disclosure shall be made at the meeting of the Board at which the question of entering into the contract or arrangement is first taken into consideration, or if the director was not, at the date of that meeting, concerned or interested in the proposed contract or arrangement, at the first meeting of the Board held after he becomes so concerned or interested. [Section 299(2)(a)]
Section 299 casts a duty on a director for disclosure embedded in many provisions of the Companies Act, 1956. Accordingly, every director of a company who is, in any way, whether directly or indirectly, concerned or interested in a contract or arrangement, or proposed contract or arrangement, entered into or to be entered into, by or on behalf of the company, shall disclose the nature of his concern or interest at a meeting of the Board of directors.
1. Object of disclosure of interest
The directors are in a position of trustees under common law and they have a fiduciary relation towards the company and its shareholders, so as to ascertain whether he is acting for his own benefit or in any way prejudice to the interest of the company.
2. Disclosure of nature of interest whether direct or indirect
A director is said to be directly concerned or interested in a contract or arrangement, when he himself has personal interest in a particular contract or arrangement. Whereas a director is said to be indirectly concerned or interested when any of his relatives and associates has got personal interest in the particular contract or arrangement.
3. Disclosure of interest is applicable to all companies
The section is applicable to all companies. Therefore, all directors are required to give the notice of disclosure, in writing. It is equally applicable to the alternate director including the directors appointed by the financial institutions and the Central Government under section 408 of the Act.
4. Time for disclosure of concern or interest in a particular contract or arrangement
Every director of a company, who is in any way, whether directly or indirectly, concerned or interested in a contract or arrangement, or proposed contract or arrangement, entered into or to be entered into, by or on behalf of the company, shall disclose the nature of his concern or interest at a meeting of the Board of directors. Section 299(2) relates to the time of disclosure, which may be described as under, depending upon the status of contract. (Appendix 1)
In the case of proposed contract or arrangement, the disclosure shall be made at the meeting of the Board at which the question of entering into the contract or arrangement is first taken into consideration, or if the director was not, at the date of that meeting, concerned or interested in the proposed contract or arrangement, at the first meeting of the Board held after he becomes so concerned or interested. [Section 299(2)(a)]
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