Disclosure under 299

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Dear All,
 
Section 299(6)read as "Nothing in this section shall apply to any contract or arrangement entered into or to be entered into between two companies where any of the directors of the one company or two or more of them together holds or hold not more than two per cent of the paid-up share capital in the other company"
 
My query is
 
1. whether two percent or more shareholding clause will include both public & private company or it is only applicable to public company.
 
2. Also if relative of Director also holds 2% or more shares in a company, whether the disclosure of that company (in which his relative holds 2% shares) is required by the Director.
 
Thanks

 

Replies (1)

Dear Kamalji,

 

Section 299 of the Companies Act 1956 applies to all types of companies, public and private as well. It also applies to all types of directors. It applies to directors nominated by the government. (Please refer DCA circular no. 9/19(299) 63-PR, dated 20 September 1963). Further, it also applies to other nominee directors.

 

Section 299 applies to arrangements, besides contracts, in which a director is concerned or interested 'in any way', 'whether directly or indirectly', eg, a contract in which a director is interested through his relatives. (Please refer the case law, Pydah Venkatachalapati versus Guntur Cotton, Jute & Paper Mills Co. Ltd. AIR 1929 Mad 353). 

 

Regards,

Veeral Gandhi

 


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