Sowmya P K (Chartered Accountant) 25 May 2012
A private company has a director who is also a partner in a firm. This firm provides secretarial services to the company and monthly fee is less than Rs. 250000/-.
What are the company law provisions to be adhered to?
Thanks in Advance...
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CS MOHIT SALUJA (PRACTICING CS Jalandhar 9914558709) 25 May 2012
As per Section 297 (1) Board’s sanction is required if:
enters into a contract with the company (a) for the sale, purchase or supply of any goods, materials or services; or (b) for underwriting the subscripttion of any shares in, or debentures of the company.
Further, the board’s sanction to be supported by the PREVIOUS approval of the Central Government, if the company’s paid-up capital is not less than Rs.1 Crore.
As per Section 297 (2) Exemption to board’s sanction - to the contract for the sale, purchase or supply of goods, materials or services, ie: Section 297 (1) (a) doest not apply, to the following:
So from the above it is clear that the company should pass a resolution in the Board Meeting for availing the services of teh Firm as the Director is interested in the particular Firm as he is a partner and require Central Government Approval if the capital is more than Rs. 1 Crores.