Section 188 of companies act 2013

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Yashwant Patel

Working with CA firm

43 Points Posted on 09 February 2016

As required by section 188 of the companies act 2013, “(1) Except with the consent of the Board of Directors given by a resolution at a meeting of the Board and subject to such conditions as may be prescribed, no company shall enter into any contract or arrangement with a related party”

As per the provision to section 1 to section 188 “Provided that no contract or arrangement, …………, shall be entered into except with the prior approval of the company by a resolution:”

Whether we have to get the approval of board of director even if prior approval of the company by a resolution is required for entering into the contract with related party

Replies (2)

Pallavi Moonka

company sectretary

81 Points Posted on 11 February 2016

A company can enter into RPT only with the consent of BOD by way of a resolution at a Board Meeting. Further more, a RPT can be entered before obtaining Board Approval but such RPT should be ratified by the Board within 3 months from the date of contract.

Approval shall be taken from the Audit Committee, if any, for entering into such Transactions.

There are certain transactions which require Prior Approval of Members by Special Resolution in addition to Board Resolution.