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Unit 10: Management of Company

However, these restrictions do not apply to: Notes
1. A private company which is neither a subsidiary nor a holding company of a public
company;

2. A private subsidiary company in respect of contracts or arrangements entered into by it
with the holding company;
3. Any contract of indemnity against any loss which any director(s) may suffer by reason of
becoming or being a surety or sureties for the company;
4. A company in which the director had only his qualification shares and he was nominated
as a director by the other company with which the contract is entered into;
5. A company in which the director is a member holding not more than two per cent of the
paid-up share capital of the company.

A director who knowingly contravenes the provisions of s.300 is liable to be fined up to
50,000.

10.8.2 Register of Contracts in which Directors are Interested

To ensure that the provisions of sections 297-300 are complied with, s.301 provides as follows:
1. Every company must keep one or more registers in which must be entered separately
particulars of all contracts or arrangements in which directors and their relatives are
interested, and also particulars of firms and companies in which directors are interested as
partners, members or directors. The particulars to be entered in the register are:
(i) The date of the contract or arrangement;
(ii) The names of the parties thereto;
(iii) The principal terms and conditions thereof;
(iv) The date on which the contract was placed before the board, where it is required to
be placed;
(v) The names of the directors voting for and against the contract or arrangement; and
(vi) The names of directors who remained neutral.
2. The aforementioned particulars must be entered in the register within seven days of the
approval of the board, where approval is required.
In case of any other contract or arrangement, the particulars must be entered in the register
within seven 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 contracts or
arrangements whichever is later.
The register is required to be placed before the next meeting of the board and is then to be
signed by all the directors present at the meeting.
3. The register aforesaid shall also specify, in relation to each director of the company,
the names of the firms and bodies corporate of which notice has been given by him
under s.299.
4. Exemption has been granted to contracts for the sale or purchase or supply of goods, etc.
not exceeding 1000 in value in any year, and also to contracts by banking companies for
collection of bills in the ordinary course of business, and transactions of banking and
insurance companies in the ordinary course of business with any director, relative,
partner, etc.

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