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ARUN KUMAR MAITRA (Querist)

27 June 2015 The listing agreement provides exemption from obtaining approval of Audit committee for related party transactions between two government companies. MCA vide its notification dated 5th Jun’15 provides exemption from obtaining approval for related party transactions between two government companies.
MCA has granted exemption from section 188 for transactions between two Govt. Companies but not from section 177(4) (iv).
Terms of reference of audit-committee inter-alia includes approval or modifications of all RPTs.
Therefore, above transactions need approval of audit-committee. However, no approval of the board/shareholders will be required, if it does not attract section 188.
Others may express their views on the matter.

Shashikant Sharma

Shashikant Sharma (Expert)

29 June 2015 This is the same situation in case of transaction are arm's length and in ordinary course of business. As per third proviso of Section 188(1) no approval is required in case transaction are arm's length and in ordinary course of business but still RPT should places before audit committee as required in 177(4)(iv).
others views are solicited...

ARUN KUMAR MAITRA

ARUN KUMAR MAITRA (Querist)

29 June 2015 Govt. has granted exemption only from first and second proviso to sec.188 to transactions between two Govt. Companies.So Board's approval u/s. 188 and audit committee approval u/s. 177(4)(iv) will still be applicable.

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