Dear All
I have one query as far as section 297 of companies act is concerned.
A Pvt. Limited co is giving trasportation services to other private limited company where directors are common.
Please let me know the implications of above section.
Thanks & regards
Kirtida
Sec 297 – CONTRACTS IN WHICH DIRECTORS ARE INTERESTED
Contracts
Purchase/ Sale / Supply à Goods/ Materials / Services OR
Underwriting of Shares/ Debentures;
Authority for Approval
Board Meeting – Consent at Board Meeting or Convene BM within 3 Months;
Prior approval of CG – If Paid up Capital is 1crore OR more;
File E-Form 24A for Central Government (CG) Approval
NOTE – NO Blanket consent permissible, meaning, every transaction to be considered separately
INTERESTED PERSONS
|
DIRECTOR |
His Relative |
- |
|
FIRM |
Director or Relative is a Partner |
Other Partners of the Firm |
|
PRIVATE COMPANY |
Directors is a Member |
Director is a Director |
Just 3 Conditions to attract Sec.297 (All Conditions Mandatory)
CONTRAVENTION
“Contract becomes VOIDABLE” at the option of the Board of Director, if Paid Up Capital is Less Than `1. Crore;
“629A penalty applies” ie. Penalty where no specificpenalty is provided under the Act. The defaulting company, officer and such other persons shall be imposed fine UPTO Rs. 5000/- and `500 PER Day in case of continuing offence
Note: Director need NOT VACATE u/s 283.
Sec 297 Not Applicable to –
If a public company gives and takes short term loan/advance to/from its private group company, whether sec 297 & 299 applicable?
CAclubindia
