Section 297, 299 (companies act)

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Querist : Anonymous

Querist : Anonymous (Querist)

03 December 2012 Dear experts,

In a PVT. LTD. Company, there are two directors. the Company have transactions with an American company. and the Director of American Company is a relative of one of the Directors of Indian Company. Is section 297 or 299 applicable to Indian company?

Ajay Mishra

Ajay Mishra (Expert)
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03 December 2012 Hi

Section 297 does not apply to:

1. Giving or taking loans.
2.Contract in respect of immovable property (as it is not 'good' ).{Letter No. 9/4190-CL-X dated 27.03.1990}.
3.Contract between two public Companies.
4.Contract of employment of director or managing or whole time director.[ Circuler No.8/11/75-CL-V dated 27.03.1975]
5.Contract for employment of relative of director.
6.Contract entered into by the company with the dealer on principle to principle basis. [Circuler No. FM 8/297/56-PR dated 02-08-1956]
7. Professional services of the nature given by firms of solicitors and advocates, etc.[circuler No. 8/11/75-CL-V dated 05.06.1975]
8.hiring of office premises on rent as the transaction is in immovable property. [Department Clarification dated 10-09-1990]

Ajay Mishra

Ajay Mishra (Expert)
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03 December 2012 Hi

Section 297 and 299 deal with Companies Registered in India.

Querist : Anonymous

Querist : Anonymous (Querist)

03 December 2012 Thank you very much sir.
Now I am quiet clear with applicability as you mentioned in your 1st reply.
but the real question is as u mentioned in 2nd reply about applicability of said sections to the company registered outside India.
is it mentioned expressly that company reg. outside India are not covered or is it a practice? thank you very much

Ajay Mishra

Ajay Mishra (Expert)
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03 December 2012 Hi

Generally section 299 deal with direct or indirect interest of director. But section are silent about whether it will be applicable a company incorporated outside India or not.

So,I am not sure about applicability on foreign company. I will suggest you to check AS-18 deal with related party disclosure.

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