Section 188 & 117 of the companies act 2013

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This query is : Resolved

CA Gaurav Ajit Potdar (Querist)

24 January 2015 Facts:

Under Section 188 of the Co. Act 2013 if a specified Related party transaction is entered by a Company it was required to be approved by a special resolution. and subsequently such resolution is required to be Filled with ROC in form MGT 14 under sec 117 of the Co. Act 2013. Now there is ammendment in sec 188 in December 2014 which replaced the requirement of special resolution with Ordinary resolution.

Query::

If a Company enters into related party transactions in the year 14 - 15 Say May 2014 is it sufficient if ordinery resolution is passed which also is not required to be filled with ROC u/s 117.

or

The company is required to pass a special resolution and also file it with ROC u/s 117.

What would be the answer if related party transaction is entered in the month of January 2015.

c.bakshi

c.bakshi (Expert)

26 January 2015 Some Resolutions are necessary to file to ROC even if they are ordinary and Section 188 is one of them. however, if the transaction is at arm's length price, then it need not to take the approval and file MGT-14

CA Gaurav Ajit Potdar

CA Gaurav Ajit Potdar (Querist)

26 January 2015 Ya but does section 117 specify that section 188 resolution needs to be filled with the ROC ? because according to me it only states Special resolution and some other Directors resolutions, which does not include section 188 ordinary Resolution.
Thats my understanding of these Sections please correct if am wrong

c.bakshi

c.bakshi (Expert)

28 January 2015 See, As per new act, interested person cant vote and seek approval unless it is special resolution. if suppose there are oonly two director out of which one is interested. then mgt-14 needs to be filed

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