MCA amends the limits for board approval of related party transactions

Ministry of Corporate Affairs (“MCA”) vide Gazette Notification No. G.S.R. 857 (E) dated 18 November 2019, amended Rule 15(3)(a) of the Companies (Meetings of Board and its Powers) Rules, 2014 per below table:

Previous Position Present Position
Board approval for purchase of goods/disposing of property through related party was mandatory for an amount

  • up to 10% or more of the turnover of the company or
  • INR 100 Crore or whichever is lower
The part of INR 100 crore is omitted.  Hence, Board approval will now be required for an amount up to 10% or more of the turnover alone.
Board approval was mandatory for leasing of any property amounting to lower of the below:

  • 10% or more of net worth of the company
  • 10% or more of turnover of the company
  • INR 100 Crore
The part of INR 100 Crore and the part of of networth is omitted. Board approval will now be required for an amount up to 10% or more of the turnover alone.
Board approval was mandatory for availing or rendering of any services amounting to lower of the below:

  • 10% or more of turnover of the company or
  • INR 50 Crore
The part of INR 50 crore is omitted.  Hence, Board approval will now be required for an amount up to 10% or more of the turnover alone.

Source: http://egazette.nic.in/WriteReadData/2019/214065.pdf