Section 299 applicability

No need for any specific disclosure if general disclosure is given  by the directors in form 24AA under section 299 which is valid for one financial year.  All the contracts with the company in which directors are interested is to be recorded in Register of Contracts u/s 301.

Dear Rakesh!

you mean to say that sec 299 (specific disclosure from Director in Board Meeting) is not applicable and sec 301 applies.

Yes, specific disclosure is not required (as required under section 297)  if the name of these company is mentioned in general disclosure.

Others view solicited.

Dear Rakesh!

What i understood from your reply is to "Enter contracts in the register as per sec 301".

As per you, Sec 299 doesn't apply & section 301 applies.

But Section 301 says entries to be made pursuant to section 297 & 299.

Section 297 doesn't applies to above case as the contract is between a Public Ltd Co and with a Body Corporate (Foreign Company). 

My query is Applicability of Section 299 only. 

Section 299 says (1) Every director of a company who is in any way, whether directly or indirectly, concerned or interested in a contract or arrangement, or proposed contract or arrangement, entered into or to be entered into, by or on behalf of the company, shall disclose, the nature of his concern or interest at a meeting of the Board of directors.

The words in any way interested, should be construed as extending not only to the case where the director has a personal interest but also to the case where he owes a duty which may conflict with his duty. As per this - Sec 299 (1) applies - Specific Disclosure needs to be taken which automatically attracts Section 301.

(6) "Nothing in this section shall apply to any contract or arrangement entered into or to be entered into between two companies where any of the directors of the one company or two or more of them together holds or hold not more than two per cent of the paid-up share capital in the other company".

Can we take exemption from Sec 299 on the basis of shareholding (directors hold NIL % of shareholding in both co's) as already General Disclosure taken from Directors at the beginning of the year? If we take exemption u/s 299 -automatically Sec 301 doesn't apply.

Dear, I have said that specific disclosure is not required if general disclosure(notice) u/s 299 is given by the director.  I have nowhere used the word that section 299 is not applicable in your case.  The contract is to be recorded in Register of Contracts u/s 301.  299(6) do says that provision of the section is not applicable if holding of director(s) does not exceed 2% of the paid-up capital but sub-section (1) says that " concern or interested in any way, whether directly or indirectly".  So I will suggest enter the details of contract in Register of Contract as a good corporate practice.

Dear Tridha,

Pursuant to 299(6) of the Companies Act, 1956  Section 299 shall not apply because directors holds Nil Shares.

The entries to be made in Register of Contract pursuant to section 299 or 297.

Keeping in  view the above facts , there will be no non-compliance if entries are not made.

thanks Rakesh & Charu Srivastava.