Section 297 of the Companies Act

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Sunil Kr. Sanganeria (Querist)

12 October 2010 A Private Limited Company wants to gie loan to an Individual who holds 9.5 % shares in Company. That Individual is not a director of the Company but his father is director of that Company.

I want to know whether loan given by a Private Limited Company to an Individual who is shareholder of the Company attracts section 297 of the Companies Act.

Please clarify

Ajay Mishra

Ajay Mishra (Expert)

12 October 2010 Dear Friend

The provisions of section 297 will apply on contract in which director or his relative is interested. But in your case the director is not interested so his relative will also not cover under this section.

Others view will also be solicited.

Regards

Bhaskaran Chackrapani Warrier

Bhaskaran Chackrapani Warrier (Expert)

12 October 2010 Section 297 attracts only if there is a contract for sale or purchase of goods or a contract to render services. Loan is out side the purview of the section.

Sunil Kr. Sanganeria

Sunil Kr. Sanganeria (Querist)

12 October 2010 would any other section of the Companies Act other than 297 applies to it

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