MCA changes approval limits for related party transactions

MCA vide Notification dated 18th November, 2019 has amended the Companies (Meetings of Board and its Powers) Rules, 2014 to provide new threshold limit for contracts or arrangements entered into with related party under section 188 with the prior approval of the members of company by an ordinary resolution.

S. No. Transactions Old threshold limit New threshold limit
1. Sale, purchase or supply of any goods or materials directly or through appointment of agent Amounting to 10% or more of the turnover of the company or Rs. 100 crore (whichever is lower). Amounting to 10% or more of the turnover of the company.
2. Selling or otherwise disposing of, or buying, property of any kind directly or through appointment of agent Amounting to 10% or more of net worth of the company or Rs. 100 crore (whichever is lower). Amounting to 10% or more of net worth of the company.
3. Leasing of property of any kind Amounting to 10% or more of the net worth of the company or 10% or more of turnover of the company or Rs. 100 crore (whichever is lower). Amounting to 10% or more of the turnover of the company or Rs. 100 crore (whichever is lower).
4. Availing or rendering of any services directly or through appointment of agent Amounting to 10% or more of the turnover of the company or Rs. 50 crore (whichever is lower). Amounting to 10% or more of the turnover of the company.

Please also refer attached circular.