MCA Updates 14th August 2014_ second amendment in Companies (Meeting of Board and its Powers) Rules 2014 ‘

Ministry of Corporate Affairs, on 14th August 2014 has made amendments in rules made under Chapter VII, of the Companies Act 2013, i.e. Companies (Meeting of Board and its Powers) Rules 2014

 

This is second amendment made by Ministry, and will come into effect from the date of its publication in official gazette.
Rule No. 3 , 4 and 15 were amended by this amendments the details are as below;

(1)  in rule 3,

  • in sub rule(6), the word and commas, “which shall be in India” shall be omitted.

(2)  in rule 4:

(a) in sub rule (1), for the brackets, figure and word “(1) The”, the word “The” shall be substituted;

(b) in clause (iv), for the words “consideration of accounts”, the words “consideration of financial statement including consolidated financial statement, if any, to be approved by the Board under sub-section (1) of section 134 of the Act” shall be substituted.

(3)  in rule 15, for sub-rule (3), the following sub rule shall be substituted, namely:-

“(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, a company shall not enter into transaction or transactions, where the transaction or transactions to be entered into,-

(a)As contracts or arrangements with respect to clause (a) to (e) of sub section (1) of section 188, with criteria mentioned below-

  • Sale, purchase or supply of any goods or materials, directly or through appointment of agent, exceeding 10% of the turnover of the company or rupees 100 crore, (whichever is lower) 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, exceeding 10% of the net worth of the company or rupees 100 crore, (whichever is lower) as mentioned in clause (b) and clause (e) respectively of sub section (1) of section 188;
  • Leasing of property of any kind exceeding 10% of the net worth of the company or rupees 100 crore, (whichever is lower) as mentioned in clause (c) sub section (1) of section 188;
  • Availing or rendering of any services, directly or through appointment of agent, exceeding 10% of the turnover of the company or rupees 50 crore, (whichever is lower) as mentioned in clause (d) and clause (e) respectively of sub section (1) of section 188;

Explanation- it is hereby clarified that the limits specified in sub clauses (i) to (iv) shall apply for transaction or transactions to be entered into either individually or taken together with the previous transactions during a financial year.

(b)Is for appointment to any office or place of profit in the company, its subsidiary company or associate company at a monthly remuneration exceeding two and half lakh rupees as mentioned in clause (f) of sub section (1) of section 188; or

(c)Is for remuneration for underwriting the subscription of any securities or derivatives thereof, of the company exceeding 1% of the net worth as mentioned in clause (g) of sub section (1) of section 188.

Explanation-

  • The turnover or net worth referred in the above sub rules shall be computed on the basis of the Audited Financial statement of the preceding Financial year.
  • In case of a wholly owned subsidiary, the special resolution passed by the holding company shall be sufficient for the purpose of entering into the transactions between the wholly owned subsidiary and the holding company.
  • The explanatory statement to be annexed to the notice of a general meeting convened pursuant to section 101 shall contain following particulars, namely:-
    -Name of related party;
    -Name of the director or key managerial personnel who is related, if any;
    -Nature of relationship;
    -Nature, material terms, monetary value and particulars of the contract or arrangement;
    -Any other information relevant or important for the members to take a decision on the proposed resolution”

 

The amended rules can be downloaded from the following link
http://mca.gov.in/Ministry/pdf/NCA_Rules_16082014.pdf:

 

 

Thanks & Regards:

KASHIF ALI & ASSOCIATES
Company Secretaries

268, Business India Complex,
Uday Park, New Delhi-110049
Call us: +91 9718483209
Mail:  cs.kashifali@gmail.com

 

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