Contract by One Person Company
📚 Law Minded summary
A One Person Company where the sole member is also the sole director presents an obvious problem: there is nobody on the other side of the table.
So where such a company contracts with that member, and the contract is not in the ordinary course of business, the terms must be recorded in the minutes of the first Board meeting after it.
The company must also inform the Registrar of every such contract.
(1) Where One Person Company limited by shares or by guarantee enters into a contract with the sole member of the company who is also the dire ctor of the company, the company shall, unless the contract is in writing, ensure that the terms of the contract or offer are contained in a memorandum or are recorded in the minutes of the first meeting of the Board of Directors of the company held next after entering into contract: Provided that nothing in this sub -section shall apply to contracts entered into by the company in the ordinary course of its business.
(2) The company shall inform the Registrar about every contract entered into by the company and recorded in the minutes of the meeting of its Board of Directors under sub -section (1) within a period of fifteen days of the date of approval by the Board of Directors.
All sections in Chapter XII — Meetings of Board and Its Powers