VERY URGENT_VOILATION ??

yes there is voilation as per the CARO nd aslo the co is required to maintain a register as per sec 301 of companies act

As per CARO:

Contract in which director are interested :

here Mr X the director in interested as the owner of the foreign entity is brother in law nd had made a purchase of 98% frm that entity...  nd as per the sec 301 a register is to be maintained in which the contarct / arrangements made have to be entered into that registed if the director is interested in the contract...

The basic question is that whether BROTHER IN LAW (i.e, wife's brother) falls under the category of RELATIVE OF DIRECTOR, ??? Because it is nowhere mentioned that brother in law is relative under any law as of now.

Regards,

Also kindly check whether the formalities under FEMA have been followed or not.

Originally posted by : Rehaan
	ABC Ltd has made approximate 98 % purchase from a foreign entity. Mr. X is director in ABC Ltd. and his brother in law is the owner of that foreign entity.   However, company ABC Ltd did not disclose anything about these transactions either in Annual Report nor elsewhere to its shareholders.   My query is that whether is there any kind of voilation either by company or its directors/management. Please reply quoting the reference to law or any case.     Thanks in advance.

 Hello Mr Rehaan

In my opinion,

ABC holding  98% shares of foreign entity, so that entity will become subsidiary.

ABC Co has to show disclosures in Annual report of its subsidiary.

'X' being director of ABC, and owner in foreign entity, need to do disclosure Form 24AA,

stating his position.

With regard to Brother in law case, Form 24AA has option as ' sisters husband' and not 'wife's brother'.

But still its better to disclose in form 24 AA. ( wife's brother).

Also registers needs to be updated as stated by apurva. -

Other views welcome.

regards

Santosh Shah