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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.
In case of any other contract, the required disclosure shall be made at the first meeting of the Board held after the directors becomes concerned or interested into contract or arrangement.
It may sometimes happen that directors of the company may have some interest in the contracts entered into by the companies.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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meeting of the Board where approval of the board is required or 7 days of the receipt of the particulars of such contract or arrangement at the registered office of the company or within 30 days of the date of such other contract or arrangement, whichever is later. 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the company or the other party regularly trade or does business and, b). Section 297 deals with the transactions between the company and § A director of the company § His relative § A firm in which the director or his relative is a partner § A private company of which the director is a member or director § And a partner of a firm in which the director or his relative is a partner The contract shall be entered only with the consent of Bo D accorded by a resolution passed in the board meeting.