Contracts in which directors are interested ‑ Whether proviso to the sub‑section, requiring approval of Central Government in the case of companies having paid‑up capital of Rs. 1 crore or more, applies to contract of employment of director as managing director
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Prior approval requirement: companies exceeding paid up capital threshold must obtain Central Government approval for director employment contracts. Where a company meets the paid up share capital threshold, no contract in which a director is interested, including an employment contract as managing director, may be entered into without prior Central Government approval. The only exception is the specified statutory exception; the relaxation provision that permits conditional board approval does not apply to companies subject to the prior approval proviso.
Cases where this provision is explicitly mentioned in the judgment/order text; may not be exhaustive. To view the complete list of cases mentioning this section, Click here.
Provisions expressly mentioned in the judgment/order text.
Prior approval requirement: companies exceeding paid up capital threshold must obtain Central Government approval for director employment contracts.
Where a company meets the paid up share capital threshold, no contract in which a director is interested, including an employment contract as managing director, may be entered into without prior Central Government approval. The only exception is the specified statutory exception; the relaxation provision that permits conditional board approval does not apply to companies subject to the prior approval proviso.
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