Section 188 of companies act, 2013

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Querist : Anonymous

Querist : Anonymous (Querist)

13 January 2015 Hello,
We have a client. There are four private Companies whose directors are interested parties in all four Companies(i.e. directors in all 4). The purchase & sale transaction between two of these companies requires Board approval as per Sec 188. But since interested parties cannot participate this is not possible. There are also some other shareholders apart from these directors. But approval through general meeting is also difficult since the other shareholders are unable to attend the meeting in any case due to some reasons. So how can we comply with the section 188. Please suggest me the solution for this.

c.bakshi

c.bakshi (Expert)
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16 January 2015 do the sale and purchase at arm's length price. question of related party will not arise

Querist : Anonymous

Querist : Anonymous (Querist)

16 January 2015 The company manufactures unique products for different parties. Hence no comparison is available for arms length price.

c.bakshi

c.bakshi (Expert)
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17 January 2015 Arm length price means the market prevailing prices... you may take the price of equivalent type of commodity ..if you are going to sold it to outsider, the price is market prevailing prices...

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Section 188 of companies act, 2013

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