In terms of section 300(1), no director of a companyshall, as a director take any part in the discussion of, or vote on, anycontract or arrangement entered into or to be entered into by or on behalf ofthe company if he is in any way, whether directly or indirectly, concerned orinterested in the contract or arrangement nor shall his presence count for thepurpose of quorum at the time of any such discussion or vote and if he votes,his vote shall be void.
A director would be entitled to participate indiscussion or vote on the resolution to appoint his brother as additionaldirector and the appointment would not be hit by section 300(1).Appointment of a private limited companyas sole selling agent in which a solicitor-director was interested A solicitor was a director of a public limitedcompany for which he was solicitor. The solicitor was also interested in aprivate limited company of the same group which was appointed as the soleselling agent was void and as there was no majority in favor of the resolution,no valid resolution was passed at the board meeting. Applicability to a private limitedcompany Section 207 requiring prior consent of board oncertain contracts, section 299 requiring disclosure of interest by directorsand section 301 requiring maintenance of register are applicable to a privatelimited company also.. But, under section 300 an interested director on anyitem may take part on the proceedings and vote at a board meeting in a pureprivate limited company. Register of interested contracts Every company, private limited company or publicshall keep a register and enter therein particulars of all contracts orarrangements to which section 297 or 299 applies including contracts which areexempt under the provisions as under:Date of contract/arrangementParty with whom entered intoPrincipal terms and conditions The date on which the contracts were placed beforethe board.
Names of directors voting in favor or against orremaining neutral. The register shall also specify the names of firmsand bodies corporate which notice has been given by every director under section299. The register shall be placed before the succeedingboard meeting and shall be signed by the directors present at the meeting. Inspection of register A member of company may inspect the register free ofcharge and either take extracts or copies may be asked for on the payment ofsame fees as prescribed.
Register of contracts under section 301will contain all contracts/arrangementsThe department has clarified that the requirement ofsection 301 will also apply to any contract or arrangement in the bodiescorporate of which a general notice has been given by a director pursuant tosection 299(3). Matters which shall always be consideredat meeting of the board Asthere shall be at least four board meetings in a year and as in fact the boardsof many leading companies meet more often, it is an unwritten rule that allmatters are submitted to the board for consideration and approval unless somematters are delegated by the board to any director or managing director orcommittee of direct