Shreya Shah (Company Secretary) 11 August 2008

relatives of director

Dear All,

The Director’s relatives i.e. the Director’s wife and daughter-in-law are employed in the company and are on the payrolls of the company. In this case, will these relatives still be treated as relatives under the provisions of the Companies Act, 1956 and will any contracts entered into with these relatives attract Section 297 of the Companies Act.

Thanks & Regards,

Shreya Shah

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3 Replies

Guest (n/a) 11 August 2008

Section 297 is applicable to Certain Contracts as described in sub-section 1(a) . The contract should be for sale....etc.., for which a Board's prior consent is required (unless there is urgency).

Your question relates to employement of Wife and daughter in law in the Company. Both are employed in the Company and an employer - employee relationship is established and suppose that they are not providing any services through or in a form of contract.

If it is not a contract, than no such Board's consent or Central Government consent is required.

Viewers are requested to give their opinion, if they differ.

Thanks and Regards

Guest (n/a) 11 August 2008

The wife and daughter in law will come under the definition of "relatives" as per section 6, but unless there is a contract as per 297(1)(a), the provisions won't be attracted.

Regards