Clarifications
issued by MCA on matters relating to Related Party Transactions vide
Circular No.30/2014 the following are
clarified as:-
1.
Scope of second proviso to Section 188{1) :- It is
clarified that 'related party' referred has to be construed with reference only
to the contract or arrangement for which the special resolution is being
passed. Thus, the term 'related party' in the above context refers only to such
related party as may be a related party in the context of the contract or
arrangement for which said special resolution is being passed. In all other
resolution, shareholders of the Company can participate & vote even if
member is a related patty.
2.
Applicability of Section 188 to Corporate Restructuring - Amalgamations etc-
:- It is clarified that transactions will not attract the requirements of section 188 of the
Companies Act, 2013 if arising out of Compromises, Arrangements and
Amalgamations dealt with under specific provisions of the Companies Act,
1956/Companies Act, 2013,
3.
Requirement of fresh approvals for past contracts only if any modification
after 01.04.14 under Section 188:- It is clarified
that Contracts entered into by companies, after making necessary compliances
under Section 297 of the Companies Act, 1956, which already came into effect
before the commencement of Section 188 of the Companies Act, 2013, will not require fresh approval under
the said section 188 till the expiry of the original term of such contracts.
Thus, the requirements under section 188 will have to be complied with if any
modification in such contract is made on or after lst April, 2014,
