Companies Act_Practical Problems_63

P, a director in a PSU is a nominee director of State Government. Whether any general notice is required to be given by him regarding companies in which he is interested?

Companies Act_Practical Problems_35

Company Y with a paid-up capital of Rs.50 lakhs entered into a contract with company Z in which a director of Y is holding equity shares of the nominal value of Rs.50,000. The director did not disclose his interest at the Board meeting under section 299 of the Companies Act, 1956. Is the director liable for his act?

As per Section 299, the disclosure of interest by directors do not apply to any contract or arrangement within two companies where any of the directors of one company or two or more of them together holds or hold not more than 2% of the paid up share capital in the other company. In the present case, if the holding is less than 2%, the director is not liable.

Companies Act_Practical Problems_10

X Constructions P Ltd has purchased Transferable Development rights (TDR) from Y builders Pvt. Ltd. Paid up capital of both companies is 3 crores and Mr. D is common Director in both the companies, Whether TDR are “goods / services” for the purposes of section 297 ? If Mr. Rajiv is a common director in X & Y who does not hold any shares in either of the companies, can it be said that transaction between X & Y attracts 297 but not 299? Whether answer would be different if Mr. Rajiv was holding 5 % shares as nominee of some other person?

Companies Act_Practicle Problems_7

X Pvt. ltd is partner is XY & co a partnership firm. Other Partner is Mr. Y. Mr. Y is also a Director in X Pvt. Ltd. The profit & loss sharing is 99.999% by X Pvt. Ltd and 0.001% by Y. Paid up capital of X Pvt. Ltd is 5 crores. It proposes to buy raw material of Rs. 2,00,000 per month from XY & Co on credit.

a) Whether Government approval would be required to be obtained by X. Pvt. Ltd?

b) Can company argue that XY & Co is nothing but only a different form of business organization created only for tax planning purposes?

c) Will the answer be different if Mr. Y is not a director of X Pvt. Ltd?

Companies Act_Practicle Problems_5

X Pvt. Ltd is a private limited company registered in India in which P Inc. (American Company) holds 45 % shares and Q Inc ( Another American Company ) holds 45% shares. Y Pvt. Ltd is another Indian company in which both P Inc & Q Inc holds 30 % shares each. P & Q have no relations with each other. None of directors of X Pvt. Ltd & Y Pvt. Ltd are common. Whether X Pvt. Ltd and Y Pvt. Ltd has any relation with each other? Can X Pvt. Ltd. transact with Y Pvt. ltd without attracting any provisions of “Related Party Transaction” and section 297 , 299 etc?