21 December 2021
Does purchase of land in fy 2021 by Pvt. ltd. subsidiary co. requires to pass special resolution? The Company had already passed u/s 180(1)(c), 180(1)(a) and 186 (2)(b) in 2014 for Rs. 1200 crs and has been utilised under FITL of holding company . Is it required to pass a special resolution as and when the prescribed limit is crossed and while such transaction is taking place every time. Pls advise. Also advise the procedure and draft resolution for the same.
10 July 2024
In India, as per the Companies Act, 2013, the acquisition of land by a private limited subsidiary company typically requires the approval of the board of directors. However, whether a special resolution is required depends on the specific circumstances of the subsidiary and its articles of association.
### Key Considerations:
1. **Section 180(1)(c)**: According to this section, a company requires the approval of its shareholders via a special resolution if it intends to sell, lease, or dispose of its undertaking or a substantial part thereof.
2. **Section 180(1)(a)**: This section requires the approval of the shareholders via a special resolution for any investment (other than in its subsidiaries or in the ordinary course of its business) which exceeds the prescribed limits.
3. **Section 186(2)(b)**: This section pertains to loans and investments made by the company. If the acquisition of land involves any loans or advances to third parties, it would need to comply with the provisions of this section.
### Specific Answer:
- Since you mentioned that the company had already passed resolutions under sections 180(1)(c), 180(1)(a), and 186(2)(b) in 2014 for Rs. 1200 crores, and these funds were utilized under FITL (Funded Interest Term Loan) of the holding company, these resolutions may cover the acquisition of land, depending on the terms and limits specified in those resolutions.
- **Ongoing Compliance**: Generally, if the acquisition of land exceeds the limits prescribed in the earlier resolutions or if new resolutions are required based on the company's articles of association, a special resolution may be necessary.
### Procedure for Passing Special Resolution:
1. **Board Meeting**: Convene a meeting of the board of directors to discuss and approve the proposal for acquisition of land. Ensure that the proposal complies with the company's objects as per its memorandum of association.
2. **Draft Resolution**: Draft a resolution outlining the details of the proposed acquisition, including the purpose, amount involved, and any other relevant terms.
3. **Notice to Shareholders**: Issue a notice to convene an Extraordinary General Meeting (EGM) of the shareholders, specifying the date, time, venue, and agenda of the meeting, along with a copy of the draft resolution.
4. **EGM**: Hold the EGM and obtain the approval of the shareholders by passing a special resolution. A special resolution requires the affirmative vote of shareholders holding at least 75% of the voting rights present and voting.
5. **Filing**: File the special resolution and necessary forms with the Registrar of Companies (RoC) within 30 days of passing the resolution, as per the requirements of the Companies Act, 2013.
### Sample Draft Resolution:
```plaintext RESOLVED THAT pursuant to the provisions of Sections 180(1)(c), 180(1)(a), and 186(2)(b) of the Companies Act, 2013 and other applicable provisions, including the Articles of Association of the Company, consent of the members of the Company be and is hereby accorded to the Board of Directors of the Company to acquire land situated at [location/address] for a consideration not exceeding Rs. [amount] and to incur all necessary expenditures and costs incidental thereto.
FURTHER RESOLVED THAT [Name of Director/Authorized Person], [Designation], be and is hereby authorized to do all such acts, deeds, matters, and things as may be necessary, proper, or expedient to give effect to this resolution.
FURTHER RESOLVED THAT any one of the Directors of the Company be and is hereby authorized to file necessary forms, documents, and papers with the Registrar of Companies and to do all such acts, deeds, matters, and things as may be necessary, proper, or expedient to give effect to the aforesaid resolution.
FURTHER RESOLVED THAT the Board of Directors be and is hereby authorized to delegate any of the powers contained in this resolution to any committee of directors or any director or officer of the Company.
FURTHER RESOLVED THAT the resolution passed by the Board of Directors of the Company be filed with the Registrar of Companies, [State Name], pursuant to the provisions of the Companies Act, 2013.
```
### Conclusion:
Ensure to consult with a qualified Company Secretary or legal advisor to tailor the resolutions and compliance requirements according to the specific circumstances and provisions applicable to your company. They can provide guidance based on the latest legal requirements and ensure that all necessary procedures are followed accurately.
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