CPT V24P7-Art1 (Content).pmd - Taxmann

or any form in which such Director or any
firm in which such director or relative is partner
or any private company in which such director
is a member or director or any body corporate
in which such director holds more than 25%
voting power without prior approval of the
Central Government. Special disclosure of
outstanding amount and maximum amount of
loan in the financial statement of the company
are required. The restrictions of section 295
cover both direct and indirect transactions relating
to loans.
2.1.3 Section 299: Disclosure of interest by Director
- Section 299 imposes a duty on a director to
disclose his interest in a contract or in an
arrangement in which he is interested in through
special notice at the time of entering into contract
or general notice by the last month of the end
of the financial year, in Board meeting of the
company. The general notice is given in
prescribed Form No. 24AA and its validity is
one financial year. The company has to enter
such disclosures in the register maintained
under section 301.
2.1.4 Section 300: Position of Interested Director -
The interested director is prohibited to take
part in discussion or voting related to any
contract or an arrangement in which he is
directly or indirectly interested in. This section
only applies to a public company. It helps to
avoid personal gain by interested director and
promotes impartiality in transactions.
2.1.5 Section 301: Register of contracts, companies
and firms in which directors are interested - Section
301 requires that every company shall keep
one or more registers in which directors are
interested in contract or an arrangement under
sections 297 and 299 of the Companies Act,
1956. The entries must be made within seven
days from date of board meeting at which the
contracts are approved and should be placed
in the next board meeting of the board and
should be signed by all the Directors present
at the meeting.
2.1.6 Section 314: Directors and their relatives
not to hold office or place of profit - Section 314
imposes certain restrictions on the holding of
office or place of profit in a company by the
directors and their associates. As per the following
limits of monthly remuneration, the company
has to take necessary approvals-
Limit of Remuneration Approving Authority (u/s 314)
Remuneration to Directors or their relatives is less Board’s Approval
than ` 10,000.
Remuneration to Directors or their relatives is less Approval from members-within 3 months from the
than ` 20,000, but is more than ` 10,000. date of appointment or in the first general meeting
after the appointment, whichever is later.
Remuneration to Directors or their relatives is less Prior approval of members in a general meeting
than ` 2,50,000, but is more than ` 20,000.
Remuneration to Directors or their relatives is more Prior approval of members in a general meeting and
than ` 2,50,000 approval from the Central Government.
Above stated are the necessary disclosures and
requirements under the Companies Act, 1956.
The practicing Company Secretary certifies the
compliances of the same in his compliance
certificate issued under section 383A(1) of the
Companies Act, 1956, if applicable to company.
The statutory auditor gives the comments on
above provisions in his statutory audit under
the Companies (Auditor Report) Order Rule,
2003 like maintenance of register under section
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