Section 297

 

Hi There

Need a clarification in this case :

 

1.       1.  A Ltd and B Private Ltd have two common directors with more than 2% shareholding in both companies. B( P) Ltd is in travel agency business. A Ltd purchases air tickets for its common director through B(p) Ltd and makes payment by cheque. Is it a contract covered by section 297 of the Companies Act 1956?

2.       2.  A Ltd and B Private Ltd have one common director with more than 2% shareholding in both companies. B( P) Ltd is a share broking company. A Ltd buys & sells shares of different companies through B (p) Ltd and makes payment by cheque. B (p) Ltd charges usual brokerage. Is it a contract covered by section 297 of the Companies Act 1956?

 

Thank You ...

Replies (1)

Hi,

As per my knowledge, it attracts sec. 297 for both cases.

If the company's paid up capital is not exceeding 1 cr, only board meeting is enough.

Otherwise, you get prior approval from central government.

 

Sree

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