A Ltd company has entered into a contract with a Pvt Ltd company where a nominee director of the Ltd company is substantially interested(holding more than 2% paid up capital) in the pvt ltd company. This contract entered into is pursuant to a contract entered into by these compamies when the said nominee director was not on the BOD of the Ltd company.
Does Section 299 apply?
Dear Aunali,
Yes, Sec 299 gets attracted in this case an the interested Director should disclose his interest.
Thank you Amir and Ilayaraja....
very helpful and kind of u to solve this for me.\
Hello,
Nominee director of Limited company is interested in the transaction by virtue of section 299(6). The point that concerned director was not on the BOD of the Ltd company when the contract was entered is irrelevant. Here refer section 299(2)(a) and (b).
The concerned director is required to disclose his interest at the first meeting of the Board held after the director becomes concerned or interested in the contract or arrangement.
As per section 300 interested shall not be counted for the purpose of voting and quorum. Further do not forget to enter the transaction in the register maintained under section 301.
Revert if there is any doubt.
Best Regards
DOES IS IT COVERED UNDER THE DEF OF RELATED PARTIES"????????
Ashish,
As per my information Section 297 and 299 do not apply to Related Party disclosures.
Related party disclosures are governed by AS 18 and definition is as such set out in the AS.
Gupta Sachdeva & Co. Chartered Accountants
New Delhi
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