Date: 2014-08-14Category: Extra OrdinaryState: Union GovernmentCountry: India
The Central Govt. hereby makes the following rules to amend the Companies (Meetings of Board and its Powers) Rules, 2014, These rules may be called the Companies (Meetings of Board and its Powers) Second Amendment Rules, 2014.
Executive Summary:
This notification announces the Companies (Meetings of Board and its Powers) Second Amendment Rules, 2014, amending the original 2014 rules. The amendments address board meeting procedures and related party transaction thresholds requiring special resolutions. These rules came into force on the date of their publication in the Official Gazette, August 14, 2014.
Key Points / Main Content:
Amendments to Companies (Meetings of Board and its Powers) Rules, 2014:
* These rules may be called the Companies (Meetings of Board and its Powers) Second Amendment Rules, 2014.
Rule 3 Amendment:
* Subrule 6: The phrase "which shall be in India" is omitted.
Rule 4 Amendment:
* Subrule 1(a): The word "The" is substituted for "1 The."
* Clause (iv): Replaces "consideration of accounts" with "consideration of financial statement including consolidated financial statement, if any, to be approved by the Board under subsection 1 of section 134 of the Act."
Rule 15 Amendment:
* Subrule 3 is substituted with criteria regarding related party transactions requiring a special resolution:
* Contracts/arrangements (clauses a to e of section 188(1)):
* Sale, purchase, or supply of goods/materials: exceeding 10% of turnover or Rupees 100 crore, whichever is lower.
* Selling/buying property: exceeding 10% of net worth or Rupees 100 crore, whichever is lower.
* Leasing property: exceeding 10% of net worth or 10% of turnover, or Rupees 100 crore, whichever is lower.
* Availing/rendering services: exceeding 10% of turnover or Rupees 50 crore, whichever is lower.
* Appointment to office/place of profit (section 188(1)(f)): monthly remuneration exceeding Rupees 2.5 lakh.
* Underwriting securities (section 188(1)(g)): exceeding 1% of net worth.
* Limits apply to individual or aggregated transactions within a financial year.
* Turnover/Net Worth is based on audited financial statements of the preceding financial year.
* A special resolution by the holding company is sufficient for transactions between a wholly-owned subsidiary and the holding company.
Explanatory Statement Requirements:
* The explanatory statement for a general meeting notice under section 101 must include:
* Name of the related party.
* Name of the related director or key managerial personnel.
* Nature of the relationship.
* Nature, terms, monetary value, and details of the contract/arrangement.
* Other relevant information for members' decision-making.
Impact Analysis
Companies:
Impact: Companies need to adhere to the revised rules regarding board meetings and related party transactions, especially the thresholds requiring special resolutions. The revised explanatory statement requirements for general meetings also affect companies.
Action Required: Review and update internal policies and procedures to ensure compliance with the new rules, particularly concerning related party transactions and disclosures.
Directors and Key Managerial Personnel:
Impact: Directors and key managerial personnel are impacted by the enhanced disclosure requirements related to related-party transactions and the need to ensure compliance with the specified thresholds.
Action Required: Understand the revised thresholds and disclosure requirements and ensure that related party transactions are properly identified, evaluated, and disclosed.
Shareholders/Members:
Impact: Shareholders are impacted as they may need to approve certain related party transactions via special resolution, and they will receive more detailed information in the explanatory statement for general meetings.
Action Required: Review the explanatory statements carefully and exercise their voting rights on related party transactions based on the provided information.
Key Entities Referenced
Companies Act, 2013: An Indian law governing companies, referenced in the notification's citation of authority.
Companies Meetings of Board and its Powers Rules, 2014: The set of rules being amended by this notification.
Ministry of Corporate Affairs: The Indian government ministry issuing the notification.
New Delhi: The city where the notification was issued.
Amardeep Singh Bhatia: The Joint Secretary who signed the notification.
Official Gazette: The official government publication in which the rules are published.
Section 188: Section of the Companies Act, 2013 that deals with related party transactions.
Government of India Press, Ring Road, Mayapuri, New Delhi110064: The printing press responsible for printing the document.
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EXTRAORDINARY
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PART II—Section 3—Sub-section (i)
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No. 426] NEW DELHI, THURSDAY, AUGUST 14, 2014/SHRAVANA 23, 1936
ककककााााररररपपपपोोोोररररेेेेटटटट ककककाााायययय (cid:10)(cid:10) (cid:10)(cid:10)मममम(cid:13)(cid:13)ंं(cid:13)(cid:13)ंं ााााललललयययय
अअअअििििधधधधससससचचूूचचूू ननननाााा
नई (cid:4)द(cid:6)ली, 14 अग(cid:11)त, 2014
ससससाााा....ककककाााा....ििििनननन.... 555599990000((((अअअअ))))....—के(cid:15)(cid:16)ीय सरकार, कंपनी अिधिनयम, 2013 (2013 का 18) क(cid:21) धारा 469 के साथ प(cid:25)ठत
धारा 173, 175, 177, 178, 179, 184, 185, 186, 187, 188, 189 और धारा 191 (cid:27)ारा (cid:28)द(cid:29) शि य! का (cid:28)योग
करते #ए, कंपनी (बोड’ क(cid:21) बठै क) और शि या)ं िनयम, 2014 म) संशोधन करन े के िलए िन-िलिखत िनयम बनाती ह,ै
अथा’त ्:-
1. (1) इन िनयम! का संि23 नाम कंपनी (बोड ’ क(cid:21) बैठक) और उसक(cid:21) शि या)ं दसू रा संशोधन िनयम, 2014 ह।ै
(2) ये िनयम राजप6 म) (cid:28)काशन क(cid:21) तारीख से (cid:28)वृ(cid:29) ह!गे।
2. कंपनी (बोड ’ क(cid:21) बैठक) और उसक(cid:21) शि या)ं िनयम, 2014 म )
(1) िनयम 3 के उपिनयम (6) म,) “जो भारत म ) होगा,” श;द! व अ(cid:6)पिवराम का लोप (cid:4)कया जाएगा।
(2) िनयम 4 म,)
(क) उपिनयम (1) म )“(1) वीिडय!” को<क सं=या और श;द के (cid:11)थान पर, “वीिडय!” श;द रखा जाएगा;
(ख) खंड (iv) म,) िन-िलिखत खंड रखा जाएगा अथा’त् :-
“िव(cid:29)ीय िववरणी िजसके अतं गत’ समे(cid:4)कत िव(cid:29)ीय िववरणी भी ह,? य(cid:4)द कोई हो, अिधिनयम क(cid:21) धारा 134 क(cid:21) उपधारा (1) के
अधीन बोड ’ (cid:27)ारा अनुमो(cid:4)दत होगी, के िवचार के िलए लेखापरी2ा सिमित क(cid:21) बैठक); और”
(3) िनयम 15 के उपिनयम (3) के (cid:11)थान पर, िन-िलिखत उपिनयम रखा जाएगा, अथा’त ्:-
3210 GI/2014 (1)2 THE GAZETTE OF INDIA : EXTRAORDINARY [PART II—SEC. 3(i)]
“(3) धारा 188 क(cid:21) उपधारा (1) के पहल े परंतुक के (cid:28)योजन के िलए, (cid:4)कसी िवशेष संक(cid:6)प (cid:27)ारा कंपनी के पूव’ अनुमोदन के
िसवाय, कंपनी कोई संDवहार नहE करेगी जहां (cid:4)कसी िव(cid:29)ीय वष ’ के दौरान पूव’ संDवहार! के साथ या तो वैयि क या उसके
साथ संDवहार (cid:4)कया गया हो, –
(क) धारा 188 क(cid:21) उपधारा (1) के खंड! (क) से (ड.) के संबंध म,) नीचे यथाउि(cid:6)लिखत के अनुसार मानक! के साथ
संिवदाG या करार! के Hप म) हो -
(i) धारा 188 क(cid:21) उपधारा (1) के खंड (क) और खडं (ड.) म) यथाउि(cid:6)लिखत, कंपनी का Dापारावत’ के दस (cid:28)ितशत
अथवा एक सौ करोड़ Jपए, जो भी कम हो, से अिधक क(cid:21) (cid:4)कसी व(cid:11)तु या सामKी क(cid:21) (cid:28)Lय2 या अिभकता’ क(cid:21) िनयुि के माMयम
से िबNय, Nय अथवा (cid:28)दाय करना;
(ii) धारा 188 क(cid:21) उपधारा (1) के खंड (ख) और खडं (ड.) म) यथाउि(cid:6)लिखत, कंपनी के िनवल म(cid:6)ू य के दस (cid:28)ितशत
अथवा एक सौ करोड़ Jपए, जो भी कम हो, से अिधक क(cid:21) (cid:4)कसी (cid:28)कार क(cid:21) संपि(cid:29) क(cid:21) (cid:28)Lय2 या अिभकता’ क(cid:21) िनयुि के
माMयम से िनपटान या Nय करना;
(iii) धारा 188 क(cid:21) उपधारा (1) के खंड (ग) म ) यथाउि(cid:6)लिखत कंपनी के िनवल मू(cid:6)य के दस (cid:28)ितशत या कंपनी के
Dापारावत’ के दस (cid:28)ितशत या एक सौ करोड़ Jपए, जो भी कम हो, से अिधक क(cid:21) (cid:4)कसी (cid:28)कार क(cid:21) संपि(cid:29) को पPे पर दने ा;
(iv) धारा 188 क(cid:21) उपधारा (1) के खंड (घ) म ) यथाउि(cid:6)लिखत कंपनी के वाQषक Dापारावत’ के दस (cid:28)ितशत अथवा पचास
करोड़ Jपए, जो भी कम हो, से अिधक क(cid:21) कोई सेवा, (cid:28)Lय2 या अिभकता’ क(cid:21) िनयुि के माMयम से लने ा या (cid:28)दान करना;
(cid:11)पRीकरण.- यह (cid:11)पR (cid:4)कया जाता ह ै (cid:4)क उपखंड (i) से उपखंड (iv) म) िविनSदR सीमाएं (cid:4)कसी िव(cid:29) वष’ के दौरान (cid:4)कए जाने
वाले संDवहार अथवा संDवहार! पर वैयि क Hप म ) अथवा िपछल े संDवहार के साथ लाग ूह!गे।
(ख) धारा 188 क(cid:21) उपधारा (1) के खंड (च) म) यथाउि(cid:6)लिखत दो लाख पचास हजार Jपए से अिधक के मािसक
पा(cid:25)रUिमक पर कंपनी, इसक(cid:21) अनुषगं ी कंपनी अथवा सहयोगी कंपनी म ) (cid:4)कसी पद अथवा लाभ के (cid:11)थान पर िनयुि ; अथवा
(ग) धारा 188 क(cid:21) उपधारा (1) के खंड (छ) म) यथाउि(cid:6)लिखत कंपनी के िनवल मू(cid:6)य के एक (cid:28)ितशत से अिधक क(cid:21) (cid:4)कसी
(cid:28)ितभूित अथवा DुLपV! के अिभदान के हामीदारी के िलए पा(cid:25)रUिमक।
(cid:11)पRीकरण – (1) उपयु’ उपिनयम! म ) उि(cid:6)लिखत Dापारावत’ या िनवल म(cid:6)ू य क(cid:21) गणना िपछल े िव(cid:29)ीय वष’ के लेखापरीि2त
िव(cid:29)ीय िववरणी के आधार पर क(cid:21) जाएगी।
(2) पूण ’ (cid:11)वािमLव वाली अनुषगं ी कंपनी क(cid:21) दशा म,) िनयं6ी कंपनी (cid:27)ारा पा(cid:25)रत िवशेष संक(cid:6)प पूण ’ (cid:11)वािमLव वाली
अनुषगं ी कंपनी और िनयं6ी कंपनी के बीच संDवहार के (cid:28)योजन के िलए पया’3 होगा।
(3) धारा 101 के अनुसरण म ) आयोिजत साधारण बैठक क(cid:21) सूचना के साथ सलं X (cid:4)कए जाने वाल े (cid:11)पRीकरण िववरण म )
िन-िलिखत िविशिRयां ह!गी, अथा’त ्:-
(क) संबंिधत प2 का नाम;
(ख) िनदेशक या (cid:28)मुख (cid:28)बंधक(cid:21)य काQमक, जो संबंिधत ह,ै य(cid:4)द कोई हो, का नाम;
(ग) संबंध क(cid:21) (cid:28)कृित;
(घ) संिवदा या करार क(cid:21) (cid:28)कृित, सारत: शत,Y धनीय मू(cid:6)य और अ(cid:15)य िविRया;ं
(ड.) (cid:28)(cid:11)तािवत संक(cid:6)प पर (cid:4)कसी िविनिZय को लने े के िलए सद(cid:11)य! के िलए कोई अ(cid:15)य संगत या महLवपूण’ कोई अ(cid:15)य
जानकारी।”
[फा.सं.1/32/2013-सीएल-V-पाट]’
अमरदीप [सह भा(cid:25)टया, संयु सिचव
(cid:15)(cid:15)(cid:15)(cid:15)टटटट(cid:16)(cid:16)(cid:16)(cid:16)पपपपणणणण:::: मूल अिधसूचना भारत के राजप6 म,) सं=या सा.का.िन.240(अ.) तारीख 31.03.2014 (cid:27)ारा (cid:28)कािशत क(cid:21) गई थी
और अिधसूचना सं=या सा.का.िन.398(अ.) तारीख 12.06.2014 (cid:27)ारा इसम ) संशोधन (cid:4)कया गया था।¹Hkkx IIµ[k.M 3 (i)º Hkkjr dk jkti=k % vlk/kj.k 3
MINISTRY OF CORPORATE AFFAIRS
NOTIFICATION
New Delhi, the 14th August, 2014
G.S.R. 590(E).—In exercise of the powers conferred under sections 173, 175, 177, 178, 179, 184, 185,
186, 187, 188, 189 and section 191 read with section 469 of the Companies Act, 2013 (18 of 2013), the Central
Government hereby makes the following rules to amend the Companies (Meetings of Board and its Powers)
Rules, 2014, namely:—
1. (1) These rules may be called the Companies (Meetings of Board and its Powers) Second Amendment
Rules, 2014.
(2) They shall come into force on the date of their publication in the Official Gazette.
2. In the Companies (Meetings of Board and its Powers) Rules, 2014, -
(1) in rule 3, in sub-rule (6), the words 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 a transaction or transactions, where the
transaction or transactions to be entered into,—
(a) as contracts or arrangements with respect to clauses (a) to (e) of sub-section (1) of section 188, with
criteria as mentioned below -
(i) sale, purchase or supply of any goods or materials, directly or through appointment of agent,
exceeding ten per cent. of the turnover of the company or rupees one hundred crore, whichever is lower, as
mentioned in clause (a) and clause (e) respectively of sub-section (1) of section 188;
(ii) selling or otherwise disposing of or buying property of any kind, directly or through appointment of
agent, exceeding ten per cent. of net worth of the company or rupees one hundred crore, whichever is lower,
as mentioned in clause (b) and clause (e) respectively of sub-section (1) of section 188;
(iii) leasing of property of any kind exceeding ten per cent. of the net worth of the company or ten per
cent. of turnover of the company or rupees one hundred crore, whichever is lower, as mentioned in clause (c)
of sub-section (1) of section 188;4 THE GAZETTE OF INDIA : EXTRAORDINARY [PART II—SEC. 3(i)]
(iv) availing or rendering of any services, directly or through appointment of agent, exceeding ten per cent.
of the turnover of the company or rupees fifty 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 one per cent. of the net worth as mentioned in clause (g) of sub-section (1) of section 188.
Explanation.- (1) 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.
(2) 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.
(3) The explanatory statement to be annexed to the notice of a general meeting convened pursuant to section
101 shall contain the following particulars, namely:—
(a) name of the related party ;
(b) name of the director or key managerial personnel who is related, if any;
(c) nature of relationship;
(d) nature, material terms, monetary value and particulars of the contract or arrangement;
(e) any other information relevant or important for the members to take a decision on the proposed resolution.”
[F. No. 1/32/2013-CL-V-Part]
AMARDEEP SINGH BHATIA, Jt. Secy.
Note : The principal notification was published in the Gazette of India vide No. G.S.R. 240(E), dated
31.03.2014 and was amended vide notification number G.S.R. 398(E), dated 12.06.2014.
Printed by the Manager, Government of India Press, Ring Road, Mayapuri, New Delhi-110064
and Published by the Controller of Publications, Delhi-110054.