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Query section 314(1) of the companies act, 1956.

Others 951 views 1 replies

SUJATHA NAIR

Partner

24 Points Joined April 2011

Hi:

XYZ, a private limited company has two directors, A and B (B is wife of A).

XYZ wants to avail consultancy services from ABC, a sole proprietory firm, owned by A and wants to pay a monthly remuneration of Rs.5 lacs to ABC as consultancy fees.

Does this transaction between 1) a private limited co. and 2) a sole proprietory concern owned by the Director of the Company, attracts the provisions of section 314(1) of the Companies Act, 1956? Pls advise.

Thanks,

Replies (1)

Ankita Benegal

CA Final

66 Points Joined December 2010

i would like to refer to here,an article written by one of CCI members only.Thanks GS Rao Sir,for the same
/articles/office-or-place-of-profit--13899.asp

when i googled it this is the first link i found! :)

from my understanding, i think this does not fall under the above section as it is not a position in the company.
this would however require disclosure under AS-18 (Related Parties).