Special resolution for sale of property by pvt ltd co.and its subsidiary
This query is : Resolved
07 February 2025
Kindly advise if we have to pass special resolution for sale of property in case
1. Pvt ltd co.
2. Pvt ltd co if subsidiary of holding co. which is also pvt ltd co
1. Pvt ltd co.
2. Pvt ltd co if subsidiary of holding co. which is also pvt ltd co
12 August 2025
1. Sale of Property by a Private Limited Company (Pvt Ltd Co.)
Whether Special Resolution is needed?
Generally, sale of immovable property by a company does not require a special resolution under the Companies Act, 2013, unless:
The property is a part of the company’s business assets and the Articles of Association (AoA) require shareholder approval for such sale, OR
The sale falls under related party transactions or significant transactions as per the company’s AoA or applicable laws.
If the sale is to a related party, then approval via special resolution under Section 188 (related party transactions) is required.
Also, if the property is charged against any loan, the lender’s consent may be required.
Best Practice:
Even if not strictly mandatory, many companies prefer to pass a special resolution to approve sale of immovable property for transparency and corporate governance.
2. Sale of Property by Private Limited Company Subsidiary of Holding Company (also Pvt Ltd)
The same principles apply as above.
Additionally, if the sale is between the subsidiary and the holding company (or any related parties), then:
Special resolution is mandatory under Section 188 of Companies Act for related party transactions.
The transaction needs approval from the Board and shareholders via a special resolution.
Summary Table
Scenario Special Resolution Required?
Sale of property by Pvt Ltd (normal sale) Not mandatory unless AoA or related party transaction
Sale of property to related party Yes, mandatory under Section 188
Sale of property by subsidiary to holding co. Yes, mandatory under Section 188
Additional Notes:
Always check the Articles of Association (AoA) for any specific provisions about sale of fixed assets.
For sale to promoters, directors, or related parties, strict compliances under Section 188 apply.
Consult the loan agreements to ensure no violation of covenants on sale or disposal of assets.
Filing with Registrar of Companies (ROC) may be required post-resolution.
Whether Special Resolution is needed?
Generally, sale of immovable property by a company does not require a special resolution under the Companies Act, 2013, unless:
The property is a part of the company’s business assets and the Articles of Association (AoA) require shareholder approval for such sale, OR
The sale falls under related party transactions or significant transactions as per the company’s AoA or applicable laws.
If the sale is to a related party, then approval via special resolution under Section 188 (related party transactions) is required.
Also, if the property is charged against any loan, the lender’s consent may be required.
Best Practice:
Even if not strictly mandatory, many companies prefer to pass a special resolution to approve sale of immovable property for transparency and corporate governance.
2. Sale of Property by Private Limited Company Subsidiary of Holding Company (also Pvt Ltd)
The same principles apply as above.
Additionally, if the sale is between the subsidiary and the holding company (or any related parties), then:
Special resolution is mandatory under Section 188 of Companies Act for related party transactions.
The transaction needs approval from the Board and shareholders via a special resolution.
Summary Table
Scenario Special Resolution Required?
Sale of property by Pvt Ltd (normal sale) Not mandatory unless AoA or related party transaction
Sale of property to related party Yes, mandatory under Section 188
Sale of property by subsidiary to holding co. Yes, mandatory under Section 188
Additional Notes:
Always check the Articles of Association (AoA) for any specific provisions about sale of fixed assets.
For sale to promoters, directors, or related parties, strict compliances under Section 188 apply.
Consult the loan agreements to ensure no violation of covenants on sale or disposal of assets.
Filing with Registrar of Companies (ROC) may be required post-resolution.
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