Section 300

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Hiral

Study

25 Points Joined February 2009

Whether Section 300 of the companies act will be applicable in following situation?

- Mr. P is a director in XYZ Ltd
- PQR Ltd has entered into leasing transaction with XYZ Pvt Ltd Co. & DEF Pvt Ltd.

- Now Mr. P is not director or member in XYZ Pvt Ltd Co. or DEF Pvt Ltd. But Sons of Mr. P are Director in XYZ Pvt Ltd & holds 26% and wife of Mr.P holds 50% in DEF Pvt. Ltd.

Now, Question arose whether section 300 will be trigerred in case where director is holding less than 2% but his relative is holding more percentage???

Please give reference of your reply, if possible..

Replies (2)

CS RAJESH C.CHOUDHARY

ASSISTANT MANAGER

14607 Points Joined July 2011

Dear Hiral,

S.300 is not applicable refer S.300(2) Sub-section (1) shall not apply to-

(a) a private company which is neither a subsidiary nor a holding company of a public company;

Also refer S.300(d)(ii).

Regards,

RAJESH CHOUDHARY

Tanveer Md Masood

Indispensable

361 Points Joined July 2012

DEAR HIRAL, SEC.300 STATES THAT A DIRECTOR OF A PUBLIC COMPANY OR A PRIVATE COMPANY WHICH IS A SUBSIDIARY OF A PUBLIC COMPANY SHALL NOT VOTE IN RESPECT OF A CONTRACT IN WHICH HE IS CONCERNED OR INTERESTED. AGAIN SEC. 300(2) STATES THAT WHERE THE DIRECTOR HOLD LESS THAN 2% SHARES HE WOULD BE EXEMPED FROM SEC.300 THAT IS HE WOULD BE ALLOWED TO VOTE IN THE BORAD MEETING.

SEC.299 STATES THAT A DIRECTOR OF A PUBLIC OR A PRIVATE CO. WHICH IS A SUBSIDIARY OF A PUBLIC COMPANY SHOULD DISCLOSE THE NATURE OF HIS INTEREST IN THE FIRST BM HELD AFTER HIS APPOINTMENT AS DIRECTOR OF THE COMPANY.

REGARDS,

TANVEER.