Section 416 of the Act provides that every person being the manager or other agent of a public company or of a private company which is a subsidiary of a public company, which enters into a contract for or on behalf of the company in which contract the company is an undisclosed principal, shall at the time of entering into the contract:
(a) make a memorandum in writing of the terms of the contract; and
(b) specify therein the person with whom it is entered into.
It is further provided that every such person, who enters into a contract, shall
forthwith:
(a) ‘deliver the memorandum to the company;
Corporate Laws & Secretarial Practice
(b) send copies thereof to each of the directors; and
(c) such memorandum shall be filed in the office of the company and laid before
the Board of Directors t its next meeting.
It is also provided that if default is made in complying with the requirements of the above provision, the contract shall at the option of the company, be voidable as against the company, and the person who enters into the contract, or every officer in default, as the case may be, shall be punishable with a fine which may extend to two
thousand rupees
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