04 July 2009
If one private limited company sell the the 100% stake shares of its own subsidiary to another private limited company where the Directors are interested parties. Whether Section 297 of the Companies Act,1956 is applicable for the transaction. If Yes/No please justify
If a pvt. ltd. company sells shares to another pvt. limited co.(wheather or not subsidiary), where director of that co. is director, then s. 297 becomes applicable, because shares should be treated as goods as per Sale of Goods Act.
04 July 2009
Yes Section 297 is applicable with reference to the definition of goods as mentioned below:
Goods - “Goods” means every kind of movable property other than actionable claims and money; and includes stock and shares, growing crops, grass, and things attached to or forming part of the land which are agreed to be severed before sale or under the contract of sale. [Section 2(7) of Sale of Goods Act, 1930].
Along with 297 also remember section 299 and 300 are also applicable.
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