MCA issues clarification on Related Party Transactions u/s 188 MCA vide circular no 23/2014 dated 17th July 2014 has issued various clarifications on one of the most of the contentious section under the Companies Act 2013 i.e. section 188. A gist of clarifications issued are given below: Voting by related parties in general meeting As per second proviso to sub-section (1) of section 188 no member of the company shall vote on a special resolution to approve the contract or arrangement (referred to in the first proviso), if such a member is a related party. It is clarified that ‘related party referred above has to be construed with reference only to the contract or arrangement for which the said 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 the said special resolution is being passed. But the above clarification will still not provide any solution to the problem faced by the private companies where the directors and shareholders are generally common and are related to each other.
Posted on: Fri, 18 Jul 2014 07:08:32 +0000
Trending Topics
Recently Viewed Topics
© 2015