Contract or related party agreement
A company shall enter into arrangement or contract with a related party subject to the following conditions, namely:-
The agenda of the meeting board at which resolution is proposed to be proposed to be moved shall be disclose.
a, the related party name and the nature of relationship
b, the nature, contract duration and the contract particulars or arrangement;
the contract material terms or including arrangement the value, if any
the determining manner the pricing and other commercial terms, included both as part of contract;
whether all factors to the contract relevant have been considered, if not, the factors details not considered with the rationale those factors for not considering and
any other information important or relevant for the board to take a decision on the transaction proposed.
any other information important for board or relevant to take a decision on the transaction proposed.
Where any interested director in any contract or arrangement with a related party, such director shall not be present during the discussions of the meeting of the resolution on the subject matter relating to such management or contract.
For the purposes of first proviso to sub-section (1) of section (1) of section 188, except with the company prior approval by a special resolution.
i, a company having a paid-up share capital of rupees ten crore or more shall not enter into a contract or with any related party arrangement; or
a, as arrangements or contracts with respect to clauses (a) to (e) of sub-section (1) of section 188 with criteria, as mentioned below.
i, sale, purchase or any goods supply or directly materials or through appointments of exceeding agents twenty-five percent of the annual turnover in clause(a) as mentioned and clause (e) respectively of sub-section (1)of section 188;
iii leasing property of any kind exceeding of the net worth ten percent or exceeding ten percent as mentioned of turn over in clause(c) of sub-section (1) of section 188;
iv, availing or rendering directly any services or through agents appointments exceeding ten per cent of the net worth as mentioned in clause (d) and clause (e) of sub-section (1) of section 188;
any office appointment or in the company place of profit, its subsidiary company or at a monthly remuneration of associate company in exceeding two and half lakhs rupees as mentioned in clause (f) of sub-section (1) of section 188 . or;
underwriting remuneration the subscription of any securities or thereof derivatives thereof of the exceeding company one per cent of the net worth as defined in the clause (g) of sub-section(1) of section 188.
Selling or disposing of , otherwise, or buying, any kind property directly or through appointment of exceeding agents of net worth ten percent as mentioned in clause (b) and clause (e) respectively of sub-section (1) of section 188;
property leasing of any kind exceeding the net worth ten percent or exceeding turnover ten per cent as indicated in clause (c) of sub-section (1) of section 188;
availing or rendering any services directly or through agents appointment exceeding ten percent of the net worth as indicated in clause (d) and clause (e) of section 188 of sub-section (1);
remuneration for underwriting any securities subscription or thereof derivatives of the exceeding company one per cent of the net worth as mentioned in clause (g) of sub-section (1) of section 188.
The net worth or turnover referred in the above sub-rules shall be on the Audited Financial Statement basis of the preceding Financial year.
In case of subsidiary wholly owned, the special resolution passed by the company holding shall be sufficient for the purpose of entering into the transactions between the wholly owned subsidiary and holding company.
The explanatory statement to be annexed of a general meeting notice convened pursuant to section 101 shall contain the following particulars namely:–
a, the related party name;
the director name or key managerial personnel who is related if any;
relationship nature;
material terms, nature, monetary value and the contract particulars or arrangement
any other relevant information or important for the members to take decision on the resolution proposed.
Contracts register or arrangements in which directors are interested.
Every company shall keep one or more registers in Form MBP4, and shall therein enter the particulars of:-
a, company or body corporate or companies, firms or other association of individuals, in which any director has interest or concern, as indicated under sub-section (1) of section 184;
Provided that the company particulars or companies or corporate bodies in which himself director together with any other director holds two per cent or less than the share capital paid-up would not be required to be entered in the register.
arrangements or contracts with a body corporate or other entity or firm as mentioned under sub-section (2) of section 184, in which any director is directly or indirectly, interested or concerned; and
arrangements or contracts with a related party with respect to transactions to which section 188 applies.
Once the entries in the register shall be made, whenever there is a cause to make entry, in order which is chronological and shall be authenticated by the company secretary of the company of any other authorized person by the Board for the purpose.
The register shall kept at the company registered office and the register shall be permanently preserved and shall be kept in the company custody secretary for the company or authorized any other person by the purpose or the board.
The register at the registered office of the company shall be kept of the company secretary in the custody of the company secretary or any other authorized person by the board for the purpose.
The company shall issue extracts from such register to the company member on his request, within seven days from the date on which such request upon payment of such fee is made in the articles as may be specified of the company but not exceeding per page ten rupees.
Director payment for loss of office, etc, in connection with transfer of undertaking, shares or property.
No payment shall be made to the director who is managing or whole time director or the company manager by the compensation way for the loss of office or as consideration for retirement form office (other than the notice pay and statutory payments in respect with the appointment term of such manager or such director, as applicable) or in connection with such retirement or loss if–
a, the company is in default of public deposits in repayment or thereon interest payment;
b, the company is in default of debentures redemption or thereon payment of interest;
c, the company is in default of any liability in repayment, unsecured or secured, to any bank payable, public financial institution or any other financial institution;
d, the company is in payment in default of any dues towards income-vax, VAT, service tax or any other duty or tax, excise duty, by whatever name called, to the Central Government payable or any State Government, statutory authority or local authority ( other than in cases where the disputed company to pay such dues the liability).
there are statutory dues outstanding to the employees or the company workmen which have not been payed by the company (other than in cases where has disputed the company to pay such dues the liability); and
the company has not pay dividend on shares preference or not redeemed preference shares on due date.
the company has not paid dividend on the shares preference or not redeemed preference shares on due date.
