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Companies (Meetings of Board and its Powers) Second Amendment Rules, 2019
- The threshold limit for obtaining prior approval of shareholders, for entering into any related party transaction in accordance with Section 188 of the Companies Act, 2013 read with Rule 15 (3) (a) of the Companies (Meetings of Board and its Powers) Rules, 2014 has been amended.
- The amendment removes the monetary thresholds of Rs. 100 crores/50 crores for the related party transactions as previously mentioned in Rule 15 (3) (a) of the Companies (Meetings of Board and its Powers) Rules, 2014. Now the limit has been confined to "10% or more of the turnover of the company".
- The amendment will be effective from 18th November, 2019. The purpose of the amendment being relaxation of the requirement for obtaining approval of the shareholders for any related party transactions.
- Revised provisions of Rule 15(3)(a) of the Companies (Meetings and Powers of Board) Rules, 2014 are provided as under:
- “(3) For the purposes of first proviso to sub-section (1) of section 188, except with the prior approval of the company by a special resolution-
- as contracts or arrangements with respect to clauses (a) to (e) of sub-section (1) of section 188 with criteria, as mentioned below—
- sale, purchase or supply of any goods or materials, directly or through appointment of agent, amounting to ten per cent. or more of the turnover as mentioned in clause (a) and clause (e) respectively of sub-section (1) of section 188;
- selling or otherwise disposing of or buying property of any kind, directly or through appointment of agent, amounting to ten per cent. or more of net worth of the company as mentioned in clause (b) and clause (e) respectively of sub-section (1) of section 188;
- leasing of property of any kind amounting to ten percent or more of the turnover of the company as mentioned in clause (c) of sub-section (1) of section 188;
- availing or rendering of any services, directly or through appointment of agent, amounting to ten per cent. or more of turnover of the company , as mentioned in clause (d) and clause (e) respectively of sub-section (1) of section 188”:
- as contracts or arrangements with respect to clauses (a) to (e) of sub-section (1) of section 188 with criteria, as mentioned below—
- “(3) For the purposes of first proviso to sub-section (1) of section 188, except with the prior approval of the company by a special resolution-
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