Compounding of 297 transactions

The company has to obtain the prior approval from Central government  for related party transactions falls under purview of sec.297.
In some cases , if 297 transactions is completed without CG approval and if  it is a one time transaction. Then it is violation of 297.
Hence company has to compound the violation with Company law board.
Compounding application can be filed on  suo moto basis without receiving notice from authorities.
Company can pray for less penality if the application filed on suo moto basis. 

Please check the below points before filing the compounding application;

1. What is the nature of relationship.
2. What is the nature of the contract
3. Was a formal contract executed
4. What is the total value of the contract
5. Was it at prevailing market rates
6. Was it a one off transaction or repeated transactions spread over a period of time 

CSR RULES & effective date

MCA has Notified CSR related provisions of the Companies Act, 2013, has Amended Schedule VII and has also notified CSR Rules.

 

(Section 135, Amended Schedule VII and CSR Rules to come into force from 1st April, 2014)

1.       MCA, vide Notification dated 27th February, 2014, has notified Section 135 and Schedule VII of the Companies Act, 2013 (provisions relating to CSR) which shall come into force from 1st April, 2014.

2.       MCA, vide Notification dated 27th February, 2014, has notified the Companies (Corporate Social Responsibility Policy) Rules, 2014. These Rules shall come into force on 1st April, 2014.

3.       MCA, vide Notification dated 27th February, 2014, has made amendments to Schedule VII of the Companies Act, 2013. The notification shall come into force with effect from 1st April, 2014.