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Applies to: · All companies whether public or private · Contract for underwriting subscription of any shares in or debentures of the company · Oral Contracts, if it can be proved by circumstantial evidence · Contract for sale, purchase, supply of any goods, materials or services in which a director or any person connected with a director in any ways mentioned in sub section (1) of Section 297 is interested It does not apply to: · Giving or taking of loan · Contract in respect of immovable goods · Contracts between two public companies · Contract for employment of a director or managing director or whole-time director · Contract for employment of relative of a director · Contract entered into by the company with a dealer on a principal to principal basis · Professional service of the nature given by firms of solicitors and advocates etc.

· Indirect interest of directors as provided under section 299 · Hiring of office premises on rent (as the transaction is an immovable property) · A government company in respect of contracts entered into by it with another government company · Any contract for the sale, purchase or supply of goods, materials or services in which: a). Section 297 mandates to obtain the prior consent of the Board of Directors for contracts (as mentioned above) in which the directors are interested.

The object of the above section is to bring into the knowledge of the Board of directors, the extent of the interest of a director, in any contract proposed to be entered with the company by the Director or any of his specified associates.

A director is said to be interested in a contract when the party to a contract is: · A director of the company · Relative of any director · A firm in which such a director or his relative is a partner · Any other partner in such a firm · A private company of which the director is a member or director Object: The object of section 297 is to bring into the knowledge of the Board of directors, the extent of the interest of a director, in any contract proposed to be entered with the company by the Director or any of his specified associates.

24AA at the Board meeting in which contract is approved.

Or if, he is not present at that meeting, he should disclose his nature of interest at the first Board meeting after he becomes interested.

Since directors are in a key position to operate the company and so all the relevant and required transactions and agreements are entered into by the directors with the other parties to run the business of the company.

But where a company requires the previous approval of central government this relaxation shall not apply. or more are required to obtain prior approval from the Central Government (power delegated to the Regional Director) for entering into contracts covered under section 297. 24 of the companies’ general rules and forms along with a copy of board resolution and copy of agreement to be entered into should be filed. 394AA would be enough and no separate approval under section 297 would be required.

No director of a company shall, as a director, take any part in the discussion of, or vote on, any contract or arrangement entered into, or to be entered into, by or on behalf of the company, if he is in any way, whether directly or indirectly, concerned or interested in the contract or arrangement. Bulfield 1988 BCLC 104 (Ch D)] Ø Voting by an interested director will make a contract void in the following two cases: o If his exclusion from quorum would have resulted in ‘no quorum’ o If exclusion of his vote would have resulted in failure of such resolution” [Victors Ltd. Lingard (1927) 1 Ch 323] A, a director, also runs a proprietorship business to which some cos. https:// manage your symptoms properly, try out a Mediterranean diet program.

A Director who is directly or indirectly interested in a contract or arrangement shall not – · be counted for the purpose of quorum at the time of discussion and voting on any such contract or arrangement · participate in the discussion on any such contract or arrangement · vote thereon and if he does vote, his vote shall be void A contravention of the above provisions shall render the director punishable with a fine of Rs. The following decided case laws make will make it clear: Ø “If interested director votes on a contract in which he is interested, his vote will be void. It is voidable at the option of Board and not at the option of another party”. Research indicates that joint inflammation patients who alteration to this diet see their signs rapidly lessen, and also have a far better sensation all round.

Sometimes directors also make use of his position for their personal benefit.

The companies act contains some provisions under section 297 and 299 so as to prevent the misuse of key positions by the directors and makes it mandatory to disclose the transactions of the company with the directors.

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in accordance with the provisions of section 301 Ø The director concerned has given due notice with regard to change in the directorship/ membership Ø The director concerned had given notice that notice was read out at the Board meeting and minute to this effect was made with regard to the discussion held at the board meeting Ø The register of contracts in which the director concerned or interested is updated within seven days from passing the resolution Ø The register of director is updated as envisaged in section 303 Ø Direct Interest (when the director himself has personal interest in the contract or arrangement) Ø Indirect Interest (where the director has no personal interest but any of his relative is interested) Ø Pecuniary Interest (if there is some pecuniary interest of director in the contract or arrangement then he is treated to be interested) Ø Interest in proposed contract (Where concerned director knows that he is directly or indirectly interested shall be disclosed) Ø Partner of a firm (where the director is a partner with another firm to the contract) Ø Sub-partner (where the director is a sub partner with other party to the contract) Section 301 requires every company to keep one or more registers containing particulars of all contracts or arrangements covered u/s 297 or 299 in which directors are interested are entered into giving detailed information on: Ø the date of the contract or arrangement Ø the names of the parties thereto Ø the principal terms and conditions thereof Ø the date on which it was placed before the Board Ø the names of the directors voting for and against the contract or arrangement and the names of those remaining neutral. 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