On 18th November, 2019 Ministry of Corporate Affairs (MCA) had notified 2nd amendment in the Companies (Meeting of Board and its Powers) Rules, 2014 and amended the threshold limits in the criteria for distinguishing Related Party Transactions (RPT) that require authorization through resolution by the company.
The Section 188 of the Companies Act provides a set of related party transactions that requires board resolution for authorization and the first proviso provides that such transaction as specified shall also require ordinary resolution. Under the he Rule 15 of the Companies (Meeting of Board and its Powers) Rules, 2014 lays down the procedure that governs RPT transactions, the sub-rule 3 that lays down the transactions that requires resolution to be passed by the company, is amended to change the criteria that defines those transactions.
The threshold limit that defines the transactions that require authorization by ordinary resolution is altered as:
a) sale, purchase or supply of any goods or materials directly or through appointment of agent, exceeding 10% or more of the Turnover of the Company;
b) selling or otherwise disposing of, or buying, property of any kind directly or through appointment of agent amounting to 10% or more of net worth of the Company
(c) leasing of property of any kind amounting to 10% or more of the turnover of the Company
(d) availing or rendering of any services directly or through appointment of agent, amounting to 10% or more of the turnover of the Company
Click here to read the Amendment
