Approval
required for Related Party transactions (Companies Act, 2013) is mentioned in
Section 188 & Chapter 12 Rules
Section – 188 – provides such Transactions as below:-
(a)
sale, purchase or supply of any goods or materials;
(b) selling or otherwise disposing of, or buying,
property of any kind;
(c) leasing of property of any kind;
(d) availing or rendering of any services;
(e) appointment of any agent for purchase or sale of
goods, materials, services or property;
(f) such related party's appointment to any office
or place of profit in the company, its subsidiary company or associate company;
and
(g) underwriting the subscription of any securities
or derivatives thereof, of the company:
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Clarification:-
1.
A Company with paid up capital above 10 Crores: For
all above 188 transactions, special resolution is required.
2.
A Company with less than 10 Crores paid up capital
will require special resolution in following cases:-
(i)
sale,
purchase or supply of any goods or materials directly or through appointment of
agents exceeding twenty five percent of the annual turnover 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 agents exceeding ten percent. of net worth 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 percent of the net worth or exceeding
ten percent. of turnover as mentioned in clause (c) of sub-section (1) of
section 188;
(iv)
availing or rendering of any services directly
or through appointment of agents exceeding ten percent. of the net worth as mentioned
in clause (d) and clause (e) of sub-section (1) of section 188;
3. All
other Cases:
Board Resolution is only
required.
