[Companies (Meetings of Board and its Powers) Rules, 2014][1] [31st March, 2014] 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 and in
supersession of the Companies (Central Government's) General Rules and Forms,
1956 or any other rules prescribed under the Companies Act, 1956 on matters
covered under these rules, except as respects things done or omitted to be done
before such suppression, the Central Government hereby makes the following
rules, namely. (1) These rules may be called
the Companies (Meetings of Board
and its Powers) Rules, 2014. (2) They shall come into force
on the 1st day of April, 2014. (1) In these rules, unless the
context otherwise requires, (a) “Act” means the Companies
Act, 2013; (b) “Annexure” means the
Annexure appended to these rules; (c) “Fees” means the fees as
specified in the Companies (Registration Offices and Fees) Rules, 2014; (d) “Form” or “e-form” means a
form set forth in Annexure to these rules which shall be used for the matter to
which it relates; (e) “section” means the section
of the Act. (2) Words and expressions used
in these rules but not defined and defined in the Act or in the Companies
(Specification of Definitions Details) Rules, 2014, shall have the same
meanings respectively assigned to them in the Act or in the said rules. A company shall comply with
the following procedure, for convening and conducting the Board meetings
through video conferencing or other audio visual means. (1) Every company shall make
necessary arrangements to avoid failure of video or audio visual connection. (2) The Chairperson of the
meeting and the company secretary, if any, shall take due and reasonable care. (a) to safeguard the integrity
of the meeting by ensuring sufficient security and identification procedures; (b) to ensure availability of
proper video conferencing or other audio visual equipment or facilities for
providing transmission of the communications for effective participation of the
directors and other authorised participants at the Board meeting; (c) to record proceedings and
prepare the minutes of the meeting; (d) to store for safekeeping
and marking the tape recording(s) or other electronic recording mechanism as
part of the records of the company at least before the time of completion of
audit of that particular year. (e) to ensure that no person
other than the concerned director are attending or have access to the
proceedings of the meeting through video conferencing mode or other audio
visual means; and (f) to ensure that participants
attending the meeting through audio visual means are able to hear and see the
other participants clearly during the course of the meeting: Provided that the persons,
who are differently abled, may make request to the Board to allow a person to
accompany him. (3) (a) The notice of the meeting shall be sent to all the directors
in accordance with the provisions of sub-section (3) of Section 173 of the Act. (b) The notice of the meeting shall inform the directors
regarding the option available to them to participate through video
conferencing mode or other audio visual means, and shall provide all the
necessary information to enable the directors to participate through video
conferencing mode or other audio visual means. (c) A director intending to participate through video
conferencing or audio visual means shall communicate his intention to the
Chairperson or the company secretary of the company. (d) If the director intends to participate through video
conferencing or other audio visual means, he shall give prior intimation to
that effect sufficiently in advance so that company is able to make suitable
arrangements in this behalf. [2][(e) Any director who intends to participate in the meeting
through electronic mode may intimate about such participation at the beginning
of the calendar year and such declaration shall be valid for one year: Provided that such
declaration shall not debar him from participation in the meeting in person in
which case he shall intimate the company sufficiently in advance of his
intention to participate in person.] (f) In the absence of any intimation under clause (c), it shall be assumed that the
director shall attend the meeting in person. (4) At the commencement of the
meeting, a roll call shall be taken by the Chairperson when every director
participating through video conferencing or other audio visual means shall
state, for the record, the following namely. (a) name; (b) the location from where he
is participating; (c) that he has received the
agenda and all the relevant material for the meeting; and (d) that no one other than the
concerned director is attending or having access to the proceedings of the
meeting at the location mentioned in clause (b); (5) (a) After the roll call, the Chairperson or the Company Secretary
shall inform the Board about the names of persons other than the directors who
are present for the said meeting at the request or with the permission of the
Chairperson and confirm that the required quorum is complete. Explanation. A director participating
in a meeting through video conferencing or other audio visual means shall be
counted for the purpose of quorum, unless he is to be excluded for any items of
business under any provisions of the Act or the rules. (b) The Chairperson shall ensure that the required quorum is
present throughout the meeting. (6) With respect to every
meeting conducted through video conferencing or other audio visual means
authorised under these rules, the scheduled venue of the meeting as set forth
in the notice convening the meeting [3][*
* *] shall be deemed to be the place of the said meeting and all recordings of
the proceedings at the meeting shall be deemed to be made at such place. (7) The statutory registers
which are required to be placed in the Board meeting as per the provisions of
the Act shall be placed at the scheduled venue of the meeting and where such
registers are required to be signed by the directors, the same shall be deemed
to have been signed by the directors participating through electronic mode, if
they have given their consent to this effect and it is so recorded in the
minutes of the meeting. (8) (a) Every participant shall identify himself for the record
before speaking on any item of business on the agenda. (b) If a statement of a director in the meeting through video
conferencing or other audio visual means is interrupted or garbled, the
Chairperson or Company Secretary shall request for a repeat or reiteration by
the Director. (9) If a motion is objected to
and there is a need to put it to vote, the Chairperson shall call the roll and
note the vote of each director who shall identify himself while casting his
vote. (10) From the commencement of
the meeting and until the conclusion of such meeting, no person other than the
Chairperson, Directors, Company Secretary and any other person whose presence
is required by the Board shall be allowed access to the place where any
director is attending the meeting either physically or through video
conferencing without the permission of the Board. (11) (a) At the end of discussion on each agenda item, the Chairperson
of the meeting shall announce the summary of the decision taken on such item
along with names of the directors, if any, who dissented from the decision
taken by majority [4][and
the draft minutes so recorded shall be preserved by the company till the
confirmation of the draft minutes in accordance with sub-rule (12)]. (b) The minutes shall disclose the particulars of the directors
who attended the meeting through video conferencing or other audio visual
means. (12) (a) The draft minutes of the meeting shall be circulated among
all the directors within fifteen days of the meeting either in writing or in
electronic mode as may be decided by the Board. (b) Every director who attended the meeting, whether personally
or through video conferencing or other audio visual means, shall confirm or
give his comments in writing, about the accuracy of recording of the
proceedings of that particular meeting in the draft minutes, within seven days
or some reasonable time as decided by the Board, after receipt of the draft
minutes failing which his approval shall be presumed. (c) After completion of the meeting, the minutes shall be entered
in the minute book as specified under Section 118 of the Act and signed by the
Chairperson. Explanation. For the purposes of this rule, “video
conferencing or other audio visual means” means audio-visual electronic
communication facility employed which enables all the persons participating in
a meeting to communicate concurrently with each other without an intermediary
and to participate effectively in the meeting. [5][* * *] A resolution in draft form may
be circulated to the directors together with the necessary papers for seeking
their approval, by electronic means which may include E-mail or fax. The Board of directors
of [6][every
listed public company] and a company covered under Rule 4 of the Companies
(Appointment and Qualification of Directors) Rules, 2014 shall constitute an
‘Audit Committee’ and a ‘Nomination and Remuneration Committee of the Board’.][7] All related party
transactions shall require approval of the Audit Committee and the Audit
Committee may make omnibus approval for related party transactions proposed to
be entered into by the company subject to the following conditions, namely. (1) The Audit Committee shall,
after obtaining approval of the Board of Directors, specify the criteria for
making the omnibus approval which shall include the following, namely. (a) maximum value of the
transactions, in aggregate, which can be allowed under the omnibus route in a
year; (b) the maximum value per
transaction which can be allowed; (c) extent and manner of
disclosures to be made to the Audit Committee at the time of seeking omnibus
approval; (d) review, at such intervals
as the Audit Committee may deem fit, related party transaction entered into by
the company pursuant to each of the omnibus approval made; (e) transactions which cannot
be subject to the omnibus approval by the Audit Committee. (2) The Audit Committee shall
consider the following factors while specifying the criteria for making omnibus
approval, namely. (a) repetitiveness of the
transactions (in past or in future); (b) justification for the need
of omnibus approval. (3) The Audit Committee shall
satisfy itself on the need for omnibus approval for transactions of repetitive
nature and that such approval is in the interest of the company. (4) The omnibus approval shall
contain or indicate the following. (a) name of the related
parties; (b) nature and duration of the
transaction; (c) maximum amount of
transaction that can be entered into; (d) the indicative base price
or current contracted price and the formula for variation in the price, if any;
and (e) any other information
relevant or important for the Audit Committee to take a decision on the
proposed transaction: Provided that where the
need for related party transaction cannot be foreseen and aforesaid details are
not available, audit committee may make omnibus approval for such transactions
subject to their value not exceeding Rupees One crore per transaction. (5) Omnibus approval shall be
valid for a period not exceeding one financial year and shall require fresh
approval after the expiry of such financial year. (6) Omnibus approval shall not
be made for transactions in respect of selling or disposing of the undertaking
of the company. (7) Any other conditions as the
Audit Committee may deem fit.][8] (1) Every listed company and
the companies belonging to the following class or classes shall establish a
vigil mechanism for their directors and employees to report their genuine
concerns or grievances. (a) the Companies which accept
deposits from the public; (b) the Companies which have
borrowed money from banks and public financial institutions in excess of fifty
crore rupees. (2) The companies which are
required to constitute an audit committee shall oversee the vigil mechanism
through the committee and if any of the members of the committee have a
conflict of interest in a given case, they should recuse themselves and the
others on the committee would deal with the matter on hand. (3) In case of other companies,
the Board of directors shall nominate a director to play the role of audit
committee for the purpose of vigil mechanism to whom other directors and
employees may report their concerns. (4) The vigil mechanism shall
provide for adequate safeguards against victimization of employees and
directors who avail of the vigil mechanism and also provide for direct access
to the Chairperson of the Audit Committee or the director nominated to play the
role of Audit Committee, as the case may be, in exceptional cases. (5) In case of repeated
frivolous complaints being filed by a director or an employee, the audit
committee or the director nominated to play the role of audit committee may
take suitable action against the concerned director or employee including
reprimand. In addition to the powers
specified under sub-section (3) of Section 179 of the Act, the following powers
shall also be exercised by the Board of Directors only by means of resolutions
passed at meetings of the Board. (1) to make political
contributions; (2) to appoint or remove key
managerial personnel (KMP); (3) [9][* * *] (4) to appoint internal
auditors and secretarial auditor; (5) [10][* * *] (6) [11][* * *] (7) [12][* * *] (8) [13][* * *] (9) [14][* * *] (1) Every director shall
disclose his concern or interest in any company or companies or bodies
corporate (including shareholding interest), firms or other association of
individuals, by giving a notice in writing in Form MBP 1. (2) It shall be the duty of the
director giving notice of interest to cause it to be disclosed at the meeting
held immediately after the date of the notice. (3) All notices shall be kept
at the registered office and such notices shall be preserved for a period of
eight years from the end of the financial year to which it relates and shall be
kept in the custody of the company secretary of the company or any other person
authorised by the Board for the purpose. [15][* * *] (1) Where a loan or guarantee
is given or where a security has been provided by a company to its wholly owned
subsidiary company or a joint venture company, or acquisition is made by a
holding company, by way of subscription, purchase or otherwise of, the
securities of its wholly owned subsidiary company, the requirement of
sub-section (3) of Section 186 shall not apply: Provided that the company
shall disclose the details of such loans or guarantee or security or
acquisition in the financial statement as provided under sub-section (4) of
Section 186. (2) For the purposes of clause
(a) of sub-section (11) of
Section 186, the expression “[16][business
of financing industrial enterprises]” shall include, with regard to a
Non-Banking Financial Company registered with the Reserve Bank of India,
“business of giving of any loan to a person or providing any guaranty or
security for due repayment of any loan availed by any person in the ordinary
course of its business”. (3) No company registered under
Section 12 of the Securities and Exchange Board of India Act, 1992 and also
covered under such class or classes of companies which may be notified by the
Central Government in consultation with the Securities and Exchange Board,
shall take any inter-corporate loan or deposits, in excess of the limits
specified under the regulations applicable to such company, pursuant to which
it has obtained certificate of registration from the Securities and Exchange
Board of India. (1) Every company giving loan
or giving guarantee or providing security or making an acquisition of
securities shall, from the date of its incorporation, maintain a register in
Form MBP 2 and enter therein separately, the particulars of loans and
guarantees given, securities provided and acquisitions made as aforesaid. (2) The entries in the register
shall be made chronologically in respect of each such transaction within seven
days of making such loan or giving guarantee or providing security or making
acquisition. (3) The register shall be kept
at the registered office of the company and the register shall be preserved
permanently and shall be kept in the custody of the company secretary of the company
or any other person authorised by the Board for the purpose. (4) The entries in the register
(either manual or electronic) shall be authenticated by the company secretary
of the company or by any other person authorised by the Board for the purpose. (5) For the purpose of sub-rule
(4), the register can be maintained either manually or in electronic mode. (6) The extracts from the
register maintained under sub-section (9) of Section 186 may be furnished to
any member of the company on payment of such fee as may be prescribed in the
Articles of the company which shall not exceed ten rupees for each page. A resolution passed at a
general meeting in terms of sub-section (3) of Section 186 to give any loan or
guarantee or investment or providing any security or the acquisition under
sub-section (2) of Section 186 shall specify the total amount up to which the
Board of Directors are authorised to give such loan or guarantee, to provide
such security or make such acquisition: Provided that the company
shall disclose to the members in the financial statement the full particulars
in accordance with the provisions of sub-section (4) of Section 186.] [17] (1) Every company shall, from
the date of its registration, maintain a register in Form MBP3 and enter
therein, chronologically, the particulars of investments in shares or other
securities beneficially held by the company but which are not held in its own
name and the company shall also record the reasons for not holding the
investments in its own name and the relationship or contract under which the
investment is held in the name of any other person. (2) The company shall also
record whether such investments are held in a third party's name for the time
being or otherwise. (3) The register shall be
maintained at the registered office of the company. The register shall be
preserved permanently and shall be kept in the custody of the company secretary
of the company or if there is no company secretary, any director or any other
officer authorised by the Board for the purpose. (4) The entries in the register
shall be authenticated by the company secretary of the company or by any other
person authorised by the Board for the purpose. A company shall enter into
any contract or arrangement with a related party subject to the following
conditions, namely. (1) The agenda of the Board
meeting at which the resolution is proposed to be moved shall disclose. (a) the name of the related
party and nature of relationship; (b) the nature, duration of the
contract and particulars of the contract or arrangement; (c) the material terms of the
contract or arrangement including the value, if any; (d) any advance paid or received
for the contract or arrangement, if any; (e) the manner of determining
the pricing and other commercial terms, both included as part of contract and
not considered as part of the contract; (f) whether all factors
relevant to the contract have been considered, if not, the details of factors
not considered with the rationale for not considering those factors; and (g) any other information
relevant or important for the Board to take a decision on the proposed
transaction. (2) Where any director is
interested in any contract or arrangement with a related party, such director
shall not be present at the meeting during discussions on the subject matter of
the resolution relating to such contract or arrangement. (3) [18][For the purposes of first
proviso to sub-section (1) of Section 188, except with the prior approval of
the company by a [19][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, [20][amounting
to ten per cent or more] of the turnover of the company [21][*
* *], 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, [22][amounting
to ten per cent or more] of net-worth of the company [23][*
* *], as mentioned is clause (b)
and clause (e) respectively of
sub-section (1) of Section 188; (iii) leasing of property of any
kind [24][amounting
to ten per cent or more of the turnover of the company], as mentioned in clause
(c) of sub-section (1) of
Section 188; (iv) availing or rendering of
any services, directly or through appointment of agent, [25][amounting
to ten per cent or more] of the turnover of the company [26][*
* *], 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.] (1) Every company shall
maintain one or more registers in Form MBP 4, and shall enter therein the
particulars of. (a) company or companies or
bodies corporate, firms or other association of individuals, in which any
director has any concern or interest, as mentioned under sub-section (1) of
Section 184: Provided that the
particulars of the company or companies or bodies corporate in which a director
himself together with any other director holds two per cent or less of the
paid-up share capital would not be required to be entered in the register; (b) contracts or arrangements
with a body corporate or firm or other entity as mentioned under sub-section
(2) of Section 184, in which any director is, directly or indirectly, concerned
or interested; and (c) contracts or arrangements
with a related party with respect to transactions to which Section 188 applies. (2) The entries in the register
shall be made at once, whenever there is a cause to make entry, in
chronological order and shall be authenticated by the company secretary of the
company or by any other person authorised by the Board for the purpose. (3) The register shall be kept
at the registered office of the company and the register shall be preserved
permanently and shall be kept in the custody of the company secretary of the
company or any other person authorised by the Board for the purpose. (4) The company shall provide
extracts from such register to a member of the company on his request, within
seven days from the date on which such request is made upon the payment of such
fee as may be specified in the articles of the company but not exceeding ten
rupees per page. (1) No director of a company
shall receive any payment by way of compensation in connection with any event
mentioned in sub-section (1) of Section 191 unless the following particulars
are disclosed to the members of the company and they pass a resolution at a
general meeting approving the payment of such amount. (a) name of the director; (b) amount proposed to be paid; (c) event due to which
compensation become payable; (d) date of Board meeting
recommending such payment; (e) basis for the amount
determined; (f) reason or justification for
the payment; (g) manner of payment —whether
payable in case or otherwise and how; (h) sources of payment; and (i) any other relevant particulars
as the Board may think fit. (2) Any payment made by a
company by way of compensation for the loss of office or as a consideration for
retirement from office or in connection with such loss or retirement, to a
managing director or whole time director or manager of the company shall not
exceed the limit as set out under Section 202. (3) No payment shall be made to
the managing director or whole time director or manager of the company by way
of compensation for the loss of office or as consideration for retirement from
office (other than notice pay and statutory payments in accordance with the
terms of appointment of such director or manager, as applicable) or in
connection with such loss or retirement if. (a) the company is in default
in repayment of public deposits or payment of interest thereon; (b) the company is in default
in redemption of debentures or payment of interest thereon; (c) the company is in default
in repayment of any liability, secured or unsecured, payable to any bank,
public financial institution or any other financial institution; (d) the company is in default
in payment of any dues towards income tax, VAT, excise duty, service tax or any
other tax or duty, by whatever name called, payable to the Central Government
or any State Government, statutory authority or local authority (other than in
cases where the company has disputed the liability to pay such dues); (e) there are outstanding
statutory dues to the employees or workmen of the company which have not been
paid by the company (other than in cases where the company has disputed the
liability to pay such dues); and (f) the company has not paid
dividend on preference shares or not redeemed preference shares on due date. Explanation. Pending notification of
sub-section (1) of Section 247 of the Act and finalization of qualifications
and experience of valuers, valuation of stocks, shares, debentures, securities
etc. will be conducted by an independent merchant banker who is registered with
the Securities and Exchange Board of India or an independent chartered
accountant in practice having a minimum experience of ten years. [1] Ministry of Corporate
Affairs, Noti. No. G.S.R. 240(E), dated March 31, 2014, published in the
Gazette of India, Extra., Part II, Section 3(i), dated 31st March, 2014, pp.
13-22, No. 172 [2] Subs. by G.S.R.
880(E), dt. 13-7-2017 (w.e.f. 14-7-2017). Prior to substitution it read as: “(e)
The director, who desire, to participate may intimate his intention of
participation through the electronic mode at the beginning of the calendar year
and such declaration shall be valid for one calendar year.” [3] The words “, which
shall be in India,” omitted by G.S.R. 590(E), dated 14-8-2014 (w.e.f.
14-8-2014). [4] Ins. by G.S.R.
880(E), dated 13-7-2017 (w.e.f. 14-7-2017). [5] Omitted by G.S.R.
409(E), dated 15-6-2021 (w.e.f. 15-6-2021). Prior to omission it read as: “4.
Matters not to be dealt with in a meeting through video conferencing or other
audio visual means.—(1) The following matters shall not be dealt with in any
meeting held through video conferencing or other audio visual means.— (i)
the approval of the annual financial statements; (ii)
the approval of the Board's report; (iii)
the approval of the prospectus; (iv)
the Audit Committee Meetings for 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; and (v)
the approval of the matter relating to amalgamation, merger, demerger,
acquisition and takeover: Provided
that where there is quorum in a meeting through physical presence of directors,
any other director may participate through video conferencing or other audio
visual means. (2)
For the period beginning from the commencement of the Companies (Meetings of
Board and its Powers) Amendment Rules, 2020 and ending on the 30th June, 2021,
the meetings on matters referred to in sub-rule (1) may be held through video
conferencing or other audio visual means in accordance with Rule 3.” [6] Subs. for “every
listed company” by G.S.R. 429(E), dated 7-5-2018 (w.e.f. 7-5-2018). [7] Subs. by G.S.R.
880(E), dated 13-7-2017 (w.e.f. 14-7-2017). [8] Ins. by G.S.R.
971(E), dated 14-12-2015 (w.e.f. 15-12-2015). [9] Omitted by G.S.R.
206(E), dated 18-3-2015 (w.e.f. 19-3-2015). Prior to omission it read as: “(3)
to take note of appointment(s) or removal(s) of one level below the Key
Management Personnel;”. [10] Omitted by G.S.R.
206(E), dated 18-3-2015 (w.e.f. 19-3-2015). Prior to omission it read as: “(5)
to take note of the disclosure of director's interest and shareholding;”. [11] Omitted by G.S.R.
206(E), dated 18-3-2015 (w.e.f. 19-3-2015). Prior to omission it read as: “(6)
to buy, sell investments held by the company (other than trade investments),
constituting five per cent or more of the paid up share capital and free
reserves of the investee company;”. [12] Omitted by G.S.R.
206(E), dated 18-3-2015 (w.e.f. 19-3-2015). Prior to omission it read as: “(7)
to invite or accept or renew public deposits and related matters;”. [13] Omitted by G.S.R.
206(E), dated 18-3-2015 (w.e.f. 19-3-2015). Prior to omission it read as: “(8)
to review or change the terms and conditions of public deposit;”. [14] Omitted by G.S.R.
206(E), dated 18-3-2015 (w.e.f. 19-3-2015). Prior to omission it read as: “(9)
to approve quarterly, half yearly and annual financial statements or financial
results as the case may be.”. [15] Omitted by G.S.R.
971(E), dated 14-12-2015 (w.e.f. 15-12-2015). Prior to omission it read as: “10.
Loans to Director etc. under Section 185.—(1) Any loan made by a holding
company to its wholly owned subsidiary company or any guarantee given or
security provided by a holding company in respect of any loan made to its
wholly owned subsidiary company is exempted from the requirements under this
section; and (2)
Any guarantee given or security provided by a holding company in respect of
loan made by any bank or financial institution to its subsidiary company is
exempted from the requirements under this section: Provided
that such loans made under sub-rules (1) and (2) are utilized by the subsidiary
company for its principal business activities.” [16] Subs. for “business
of financing of companies” by G.S.R. 777(E), dated 11-10-2019 (w.e.f.
11-10-2019). [17] Subs. by G.S.R.
429(E), dated 7-5-2018 (w.e.f. 7-5-2018). Prior to substitution it read as: “13.
Special Resolution.—(1) Where the aggregate of the loans and investment so far
made, the amount for which guarantee or security so far provided to or in all
other bodies corporate along with the investment, loan, guarantee or security
proposed to be made or given by the Board, exceed the limits specified under
Section 186, no investment or loan shall be made or guarantee shall be given or
security shall be provided unless previously authorised by a special resolution
passed in a general meeting Explanation.—For
the purpose of this sub-rule, it is clarified that it would be a sufficient
compliance if such special resolution is passed within one year from the date
of notification of this section. (2)
A resolution passed at a general meeting in terms of sub-section (3) of Section
186 to give any loan or guarantee or investment or providing any security or
the acquisition under sub-section (2) of Section 186 shall specify the total
amount up to which the Board of Directors are authorised to give such loan or
guarantee, to provide such security or make such acquisition: Provided,
that the company shall disclose to the members in the financial statement the
full particulars in accordance with the provision of sub-section (4) of Section
186.” [18] Subs. by G.S.R.
590(E), dated 14-8-2014 (w.e.f. 14-8-2014). Prior to substitution it read as: “(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— (i)
a company having a paid-up share capital of ten crore rupees or more shall not
enter into a contract or arrangement with any related party; or (ii)
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 agents exceeding twenty-five per cent 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 per cent 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 per cent of the net worth or
exceeding ten per cent 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 per cent of the net worth as mentioned in clause (d) and clause
(e) of sub-section (1) of Section 188. (b)
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)
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 on the basis
of the Audited Financial Statement of the proceeding Financial Year. (2)
In case of wholly owned subsidiary, the special resolution passed by the
holding company shall be sufficient for the purpose of entering into the
transactions between wholly owned subsidiary and 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.”. [19] Subs. for “special
resolution” by G.S.R. 971(E), dated 14-12-2015 (w.e.f. 15-12-2015). [20] Subs. for “exceeding
ten per cent” by G.S.R. 309(E), dated 30-3-2017 (w.e.f. 30-3-2017). [21] The words “or Rupees
One hundred crore, whichever is lower” omitted by G.S.R. 857(E), dated
18-11-2019 (w.e.f. 18-11-2019). [22] Subs. for “exceeding
ten per cent” by G.S.R. 309(E), dated 30-3-2017 (w.e.f. 30-3-2017). [23] The words “or Rupees
One hundred crore, whichever is lower” omitted by G.S.R. 857(E), dated
18-11-2019 (w.e.f. 18-11-2019). [24] Subs. “amounting to
ten per cent or more] of the net-worth of the company or ten per cent or more
of turnover of the company or Rupees One hundred crore, whichever is lower” by
G.S.R. 857(E), dated 18-11-2019 (w.e.f. 18-11-2019). [25] Subs. for “exceeding
ten per cent” by G.S.R. 309(E), dated 30-3-2017 (w.e.f. 30-3-2017). [26] The words “or Rupees
Fifty crore, whichever is lower” omitted by G.S.R. 857(E), dated 18-11-2019
(w.e.f. 18-11-2019).Companies
(Meetings of Board and its Powers) Rules, 2014