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MCA amends rules to provide the related party transaction u/s 188 : It Cannot be entered without prior approval of the company by a resolution

20th November 2019




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MCA amends rules to provide the related party transaction u/s 188 : It Cannot be entered without prior approval of the company by a resolution

MCA further amended the rules to provide the related party transaction u/s 188 cannot be entered without prior approval of the company by a resolution. Uniformity of 10% has been maintained.
– Transaction relating to Sale and purchase of Goods or material- 10% or More of the T/O of the Company
– Transaction relating to selling or otherwise disposing of or buying property of any kind- 10% or more of the Net worth of the Company
– Leasing of Property of any kind- 10% or More of the Turnover of the company
– availing or rendering of any services- 10% or more of the Turnover of the Company
Accordingly, all the transaction with related party as mentioned in clause (a) to (e) of Sub Section 1 of Section 188 except Selling or otherwise disposing and buying of property shall must be approved by resolution of the members if it is of the value of 10% or More of the T/O.
In case Selling or Buying of Property it shall be 10% or more of the Net worth.
For the above calculation T/O or Net worth shall be computed on the basis of Audited Financial Statement of The Preceding FY.




20th November 2019

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