Query section 297

[Iranna pattanshetti]

Hi All,

1)       There are two group companies called ABC Pvt. Ltd., & XYZ Pvt. Ltd & ultimate parent for the both companies are same.

2)       Paid-up Capital of Both the companies is more than 1 Crores.

3)       XYX Pvt Ltd. supplies Goods to ABC Pvt. Ltd.

4)       There is no related director between these two companies.

5)       Person “A” is director of Companies ABC Pvt Ltd., & also full time employee of company ABC Pvt Ltd.

 

Proposed transition

 

a)                   Director “A” will be proposed to be a director of Company “A”.

 

Issue

 

a)                   Applicability of Section 297 of Companies Act 1956,

b)                   Board of Director Approval required for entering any contract between these two companies.

c)                   Approval from Central Government will require for the transaction between two companies i.e. purchase or sale of Goods,

 

Please advice on above mentioned issue

--
Regards

Iranna

[Iranna pattanshetti]

Regards

Iranna

[Anantha...@lifestylestores.com]

Section 297 will not attract in the following instances:

a) if the transaction relates to purchase / sale of goods & materials FOR CASH AT PREVAILING MARKET PRICES OR

b) if any contract / contracts subsists for sale, purchase or supply of any goods, materials and services, value of which does not exceed Rs.5000 in a year

Otherwise, Section 297 applies, by which board approval and prior approval of central government would be required

 

With Regards

N Anantha Murthy
Corporate Legal & Secretarial
Lifestyle International Private Limited
8th Floor, Delta Tower
Sigma Soft-tech Park
No.7, Whitefield Main Road
Bangalore - 560 066
LandLine: 080 41882032
Mob: 99014 90053

Iranna pattanshetti <irann...@gmail.com> Sent by: csmy...@googlegroups.com 07/14/2010 12:54 PM Please respond to csmy...@googlegroups.com

To csmy...@googlegroups.com cc Subject [CSMysore] Query section 297

Hi All,

 

Proposed transition

 

 

Issue

 

Regards

Iranna

--
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[paritala srinivasarao]

Dear Mr. Iranna   I think there is a small confusion in your query. Mr. A, as you wrote, is already a director in company ABC Private Limited.   If it is XYZ private limited, in which Mr. A is proposed to be appointed, then you may have to get approval from the Central Government for sale or purchase of goods between the said companies as section 297 is attracted. (paid-up capital 1 crore rupees)    Board's approval is also necessary.   Warm Regards P Srinivasa Rao Company Secretary 9840152398 --- On Wed, 14/7/10, Iranna pattanshetti <irann...@gmail.com> wrote:

From: Iranna pattanshetti <irann...@gmail.com> Subject: [CSMysore] Query section 297

Proposed transition

Issue

[Vivek Hegde]

Dear All

But the logic here is the Companies have already have some running/existing contract for the transactions before Mr. A becomes
the  Director of the other Company the Section will not apply.

Vivek

--
Warm Regards

CS Vivek Hegde,B.com, ACS, CWA
Company Secretary in Practice
No. 405, 4th Block, 7th Cross
Koramangala, Bangalore-560034
Mob: 09019756940/09900898223

[paritala srinivasarao]

Dear Vivek   Section 299 (2) (b) states that if a director becomes concerned or interested in any contract or arrangement after he becomes director in any other company then the director should disclose his interest in the contract at the first board meeting held after becoming the director in other company.   Therefore I believe even for a running contract the section applies to continue the contract.

Warm Regards P Srinivasa Rao Company Secretary 9840152398

--- On Wed, 14/7/10, Vivek Hegde <vivekhe...@gmail.com> wrote:

[Vivek Hegde]

Dear All 

Forwarded a past discussion mail on the same topic for your info.

Vivek

[Vivek Aggarwal]

Dear Iranna

 

I agree with the views of Mr. Srinivas Rao.

Regards

Vivek Aggarwal

---

From: paritala srinivasarao <psr...@yahoo.co.in>
To: csmy...@googlegroups.com
Sent: Wed, 14 July, 2010 1:09:23 PM

Subject: Re: [CSMysore] Query section 297