SECTION 294AA
POWER OF CENTRAL GOVERNMENT
TO PROHIBIT APPOINTMENT
OF SOLE SELLING AGENTS
Whether
approval of shareholders is again required before applying for approval of
government in terms of the section
Query : The existing appointment of sole selling
agent is already approved by the shareholders in general meeting. Whether the approval of the shareholders is
again required before applying to the Central Government for approval in terms
of section 294AA?
Answer : If the authority of a special resolution is
already in force, all that is required is only the additional approval of the
Central Government.
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LETTER NO. 8/2(MISC)/75-CL-V, DATED
6.6.1975
Whether, where the section is not attracted to appointment
of sole selling agent at the time of entering of agreement, it will be
obligatory to comply with the section for continuance of appointment for
remaining duration of current tenure
A question has arisen whether the approval of the
Central Government under sub-section (2) of section 294AA will be necessary for
the continuance of the sole selling agents even if the provisions of the said
section to such appointment were not applicable at the time of appointment of
the sole selling agents. In this
connection, it is clarified that in case the provisions of section 294AA(2) are
not attracted to the appointment of sole selling agents at the time of entering
of agreement with them, it will not be obligatory on the companies to comply
with the said provisions for the continuance for said appointment for the
remaining duration of their current tenure but not during any extension thereof
even if the provisions of sub-section.
(2) of section 294AA become applicable after the appointment due to the
sole selling agents acquiring substantial interest as defined in Explanation
under section 294AA.
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CIRCULAR NO.1/78[1/1/78-CL-V AND 12-15/74-CL0XI], DATED 7.3.1978.
Subsequent increase in
paid-up capital of company - Effect on appointment - Whether requires approval
of Central Government.
A
question has arisen whether the approval of the Central Government under sub-section(3)
of section 294AA will be necessary for the continuance of the sole selling
agents, even if the provisions of the said section to such appointment were not
applicable at the time of appointment of the sole selling agents. In this connection, it is clarified that in
case the provisions of section 294AA(3) are not attracted to the appointments
of sole selling agents at the time of entering of agreement with them, it will
not be obligatory on the companies to company with the said provisions for the
continuance of said appointments for the remaining duration of their current
tenure even if the provisions of sub-section (3) of section 294AA become
applicable after the appointment due to increase in the capital.
*
CIRCULAR NO.11/77[1/1/76-CL-V AND 12/15/74-CL-XI], DATED 21.11.1977