Mr A Director of A Ltd is also the sole proprietor of Alpha Traders who are the leading supplier of ...........

Companies Act-Phase (I & II) Board-powersandMeetings

Mr. A. Director of A.Ltd is also the sole proprietor of Alpha Traders who are the leading supplier of Raw Material to Supersonic Traders. Supersonic is expecting to receive an order from A Ltd. The BM convened to grant this order has Mr. A present thereat. Is he an Interested Director?

Yes, as he is indirectly to benefit from a better financial position of Supersonic

Yes, as he is owner of an entity other than Directorship of A Ltd

No, as he is a mere supplier to Supersonic, not an owner/partner therein.

No, since Mr. A is a sole proprietor and as such has immunity from provisions of Interested Directors

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Explanation:

This section applies to any contract or arrangement entered or to be entered into between two companies where any of the directors of the one or both company or more of them together hold(s) more than two per cent. of the paid-up share capital in the other company.

In other words, Section 184 is applicable to every director of a company, whether directly or indirectly, concerned or interested in a contract or arrangement or proposed contract or arrangement entered or to be entered into:

(a) In case of a body corporate –

(i) If such director or such director in association with any other director, holds more than two percent. shareholding of that body corporate; or

(ii) If such director is a promoter, manager, Chief Executive Officer of that body corporate;

(b) In case of a firm or other entity –

(i) If such director is a partner, owner or member, as the case may be.

However, this section does not override any of the rules of law made for restricting the director of the Company from having any concern or interest in any contract or arrangement with the Company.