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VERY URGENT_VOILATION ??

Rehaan (CA) (66 Points)

14 February 2011

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.

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7 Replies

apurva agarwal (CA Final Student) (307 Points)
Replied 14 February 2011

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

M. N. JHA (CA) (8316 Points)
Replied 14 February 2011

I think there is no any voilation. . . . . But i m not sure . . . So wait for seniers reply

M. N. JHA (CA) (8316 Points)
Replied 14 February 2011

Originally posted by : apurva agarwal
	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

sorry if i m wrong, . . . . . Pls explain it in detail if possible. . . Thanks

apurva agarwal (CA Final Student) (307 Points)
Replied 14 February 2011

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...

Rehaan (CA) (66 Points)
Replied 15 February 2011

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,

CA. Anuj Gupta (Practices in NRI Int.Tax FEMA TP FDI/FIPB & FCRA) (7014 Points)
Replied 20 March 2011

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

SANTOSH SHAH (Company Secretary) (754 Points)
Replied 21 March 2011

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.