Legal Question in Business Law in India
Investigation into the affairs of the company
There has been a successive fall in the profits of a company over the years.director's relatives have been appointed to the high position,paid high salaries,company has formed 2 other subsidiaries which are being managed by director's relatives,parent company gave huge loans to sub company,but no interest hasbeen realized-whether this facts warrant an investigation into the affairs of company U/S 237 of companies act.
2 Answers from Attorneys
Re: Investigation into the affairs of the company
Yes, application may be made u/ss235/236/237. However, an application to the company Law Board u/ss 397/398 could be a better and more effective way to deal with the alleged mismanagement.
Re: Investigation into the affairs of the company
In my opinion this is a fit case for filing an application u/s 237 before the Company Law Board.
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