On which company section 188 is not applicable?
> Provided that second proviso shall not apply to a company in which 90% or more members, in number, are relatives of promoters or are related parties: > Provided also that this section 188(1) shall not apply: to any transactions entered into by the company. in its ordinary course of business.
What is Section 188 of companies Act?
Generally, any person or any entity which is related to the reporting entity is said to be a related party. Further, a related party can be the situation when a person or a close member of that person’s family is associated with an entity.
Is section 188 applicable to government companies?
Vide the said Notification, Government Companies were provided relaxation from obtaining the prior shareholders’ approval as required under the first proviso to section 188(1) and consequently, from the restriction on the affirmative voting by the related parties for (a) contracts/ arrangements with other Government …
Who are covered under related-party transactions?
Who is a Related Party?
| Sl no | Related Parties |
|---|---|
| 1. | A director or his relative (Relative means a member of the same HUF, husband, wife, father, stepfather, mother, stepmother, son, stepson, son’s wife, daughter, daughter’s husband, brother, stepbrother, sister, step-sister) |
| 2. | Key managerial personnel or his relative |
Is section 186 applicable to private companies?
Note: Section 186(2) shall not apply on Specified IFSC public and private company only if a company passes a resolution either at a duly convened meeting of the Board of Directors or by circulation method.
What are the exemptions of private company?
Exemption To Private, Public And Listed Companies
| Particulars | Listed Company |
|---|---|
| Clause 2(68) Maximum No. of Members | Listed Company can have any number of Members. |
| Clause 2(68) & Section 58(2) Freely transferability of shares | Shares of a Listed Company are freely transferable. |
| Section 23 Public Offer | Same as Public Company. |
Can a private company take loan from Directors?
Acceptance of loan by a Private Company from its directors, their relatives or shareholders. A Private Company is allowed to accept loan from its directors, their relatives or shareholders.
Can a director give interest free loan to company?
Yes, Company can take interest free loan from Directors. But as per the provisions of the Section 186(7) of Companies Act, 2013, the Company which is not exempted from the provisions of section 186 as per section 186(11), can not give interest free loan to subsidiary company.
Which are the transactions that would not require approval of the shareholders under Section 188?
NOTES: 1. Approval of BOD/ Shareholders is not required if the transaction is entered into between a holding company and its wholly owned subsidiary whose accounts are consolidated with such holding company and the accounts are placed before the shareholders at the general meeting for approval. 2.
Is internal audit compulsory for companies?
As per the Companies Act 2013, following class of companies shall have to mandatorily appoint internal auditor. Every Unlisted public company if during the preceding financial year, it satisfies any of the below mentioned conditions: turnover of rupees two hundred crore or more.
What qualifies as a related party transaction?
“Related Party Transaction” means any transaction, arrangement or relationship, or any series of similar transactions, arrangements or relationships, in which (i) the Company or any of its subsidiaries is or will be a participant, and (ii) any Related Party has or will have a direct or indirect interest.
Is salary to director a related party transaction?
In the author’s view, there is no requirement of treating Director’s remuneration as a RPT as long as the sum of money paid to the director is the ‘remuneration to which he is entitled as director’. The definition of related party clearly indicates that every director is considered to be a related party to the Company.