17 June 2009
dear all, as per section 301 of the companies act 1956 every company shall keep one or more registers in which shall be entered seperately particulars of all contracts or arrangements to which section 297 or section 299 applies.
pls clarify meaning of contract and arrangement and in general business what tpye of transection come into these section
if a company where its director is a director lets out its office to that comany, is there a contract and this should be entered in to contarct register u/s 301 pls give you opinion
17 June 2009
you are covered under section 299 but not in 297. you must enter the ame in the register.
I) The company while maintaining a register of contracts, companies and firms in which directors and their associates are interested should not contravene the provisions of Section 163, Section 297, Section 299, Section 301 of The CompaniesAct, 1956. II) Every company must maintain a Register of Contracts, Companies and Firms in which the directors are interested, entering therein contacts and arrangements in which directors are interested, giving following particulars:- a) the date of the contract or arrangement; b) the names of the parties thereto; c) the principal terms and conditions thereof; d) in the case of a contract to which section 297 or section 299 (2) applies, the date on which it was placed before the Board; e) the names of the firms and bodies corporate of which a general notice has been given by the director under section 299 (3); and f) the names of the directors voting for and against the contract or arrangement and the names of those remaining neutral. 2. Application I) Particulars of every contract or arrangement to which section 297 or 299 applies must be entered in the register. II) Where section 299 is not applicable by virtue of an exemption, no particulars of such contracts or arrangements need be entered in the register. III) But where section 297 is not applicable by virtue of any exemption, it may nonetheless attract section 299 and the particulars of such a contract must be entered in the register. IV) Thus in case of a contract or arrangement between two public companies where one or more of the directors of one company holds/hold not more than two per cent of the paid-up capital of the other company, such contacts in not to be entered in the register. V) Particulars of a contract have to be entered in the register if section 297 is attracted even though section 299 is not applicable. Mere fact that one of these sections is exempted from application in a particular case does not ipso facto lead to an exemption of section 301. [DCA Circular No. 8/32(299) /69-CL-V dated 3 January 1970]. VI) The requirement in section 301 will apply also to any contract or arrangement in the bodies corporate of which general notice has been given by a director pursuant to section 299(3), whether or not they are contracts or arrangements requiring the Board's sanction under section 297. [DCA Circular No. 8/2/ (301) /63-PR dated 15 January 1963]. VII) For complying with the requirement of entries in the register, the contracts coming within the provisions of sanctions 297 and 299 have to be brought before the Board and the relevant details entered in the register. No relaxation in these requirements can be given in view of the present wording of sections 299 and 301. [DCA Circular No. Regional Director/4/ (1) /56-Ardated 2 September 1956]. VIII) In the case of contracts falling under section 299, which do not need to be placed before the Board as a result of delegation made by the Board or for any other reason, the details regarding the placing of the matter before the Board need not be shown in the register. [DCA Circular No. 9/299/56-PR dated 16 June 1956]. IX) The given time limit must be followed for the purpose of making entries:- In the case of a contract or arrangement requiring the Board's approval Within 7 days (excluding public holidays) of the meeting of the Board at which the contract or arrangement is approved. In the case of any other contract Within 7 days of the receipt at the registered office of the company of the particulars of such other contract or arrangement or within 30 days of the date of such contract or arrangement, whichever is later. X) The Register must be placed before the Board meeting held next after the particulars are entered in the register and all the directors present therein must sign it. XI) The given contracts must n